UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                                WASHINGTON, D.C. 20549

                                      FORM 10-K
                                      _________
          (Mark One)

          [X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
          SECURITIES EXCHANGE ACT OF 1934

          For the fiscal year ended December 31, 1998

          [  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
          SECURITIES EXCHANGE ACT OF 1934

          For the transition period from ______ to _______

                            Commission File Number 0-27190

                           PARAMOUNT FINANCIAL CORPORATION
                (Exact Name of Registrant as Specified in Its Charter)

                  DELAWARE                                11-3072768
               (State or Other                         (I.R.S. Employer
               Jurisdiction of                       Identification No.)
              Incorporation or
                Organization)

                                  ONE JERICHO PLAZA
                               JERICHO, NEW YORK 11753
                                (Address of Principal
                                  Executive Offices)

                                    (516) 938-3400
                               (Registrant's Telephone
                             Number, Including Area Code)

               Securities registered pursuant to Section 12(b) of the Act: 
          None.

               Securities registered pursuant to Section 12(g) of the Act: 

                       Units, each consisting of two shares of
                        Common Stock and two Class A Warrants
                        -------------------------------------
                                   (Title of class)

             Class A Warrants, each to purchase one share of Common Stock
             ------------------------------------------------------------
                                   (Title of class)

                       Common Stock, $0.04 par value per share
                       ---------------------------------------
                                   (Title of class)

               Indicate by check mark whether the Registrant (1) has filed
          all reports required to be filed by Section 13 or 15(d) of the
          Securities Exchange Act of 1934 during the preceding 12 months
          (or for such shorter period that the Registrant was required to
          file such reports), and (2) has been subject to such filing
          requirements for the past 90 days.

                              Yes X               No 
                                  --                 --
               Indicate by check mark if disclosure of delinquent filers
          pursuant to Item 405 of Regulation S-K is not contained herein,
          and will not be contained, to the best of the Registrant's
          knowledge, in definitive proxy or information statements
          incorporated by reference in Part III of this Form 10-K or any
          amendment to this Form 10-K. [ X ]

               The aggregate market value of the voting stock (Common
          Stock) held by non-affiliates of the Registrant on March 18, 1999
          was approximately $1,618,017 based on the closing sales price of
          such stock on such date, as reported by the Nasdaq SmallCap
          Market.

               The number of shares outstanding of the Registrant's Common
          Stock, as of March 18, 1999 was:  2,160,000 shares of Common
          Stock, $0.04 par value.

             ------------------------------------------------------------

                         DOCUMENTS INCORPORATED BY REFERENCE

               The Registrant's Definitive Proxy Statement relating to the
          Registrant's 1999 Annual Meeting of Stockholders, to be filed by
          the Registrant with the Securities and Exchange Commission on or
          before April 30, 1999, is hereby incorporated by reference into
          Part III of this Annual Report on Form 10-K.


    <PAGE>

                           PARAMOUNT FINANCIAL CORPORATION

                              ANNUAL REPORT ON FORM 10-K

                                  TABLE OF CONTENTS
                                                                         
                                                                        PAGE
                                                                        ----

                                        PART I

               ITEM 1 - BUSINESS  . . . . . . . . . . . . . . . . . . .   1
                         General  . . . . . . . . . . . . . . . . . . .   1
                         System Integration and Consulting Business . .   2
                         Staffing Services Business . . . . . . . . . .   4
                         Lease Finance Business . . . . . . . . . . . .   6
                         Employees  . . . . . . . . . . . . . . . . . .  10
                         Government Regulation  . . . . . . . . . . . .  10
               ITEM 2 - PROPERTIES  . . . . . . . . . . . . . . . . . .  11
               ITEM 3 - LEGAL PROCEEDINGS . . . . . . . . . . . . . . .  11
               ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY
                         HOLDERS  . . . . . . . . . . . . . . . . . . .  11

                                       PART II

               ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
                         STOCKHOLDER MATTERS  . . . . . . . . . . . . .  12
               ITEM 6 - SELECTED FINANCIAL DATA . . . . . . . . . . . .  14
               ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                         FINANCIAL CONDITION AND RESULTS OF OPERATIONS   
                         General  . . . . . . . . . . . . . . . . . . .  16
                         Fluctuations in Quarterly Results  . . . . . .  17
                         Lease Accounting . . . . . . . . . . . . . . .  18
                         Results of Operations  . . . . . . . . . . . .  18
                         Liquidity and Capital Resources  . . . . . . .  21
                         Impact of Year 2000 Issue  . . . . . . . . . .  23
                         Forward Looking Statements and Associated
                         Risk . . . . . . . . . . . . . . . . . . . . .  24
                         Inflation  . . . . . . . . . . . . . . . . . .  25
               ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES 
                           ABOUT MARKET RISK  . . . . . . . . . . . . .  25
               ITEM 8  - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA  .  25
               ITEM 9  - CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS
                           ON ACCOUNTING AND FINANCIAL DISCLOSURE . . .  25

                                       PART III

               ITEM 10 - ITEM 13 DOCUMENTS INCORPORATED BY REFERENCE  .  26

                                       PART IV

               ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND 
                         REPORTS ON FORM 8-K  . . . . . . . . . . . . .  26

          SIGNATURES  . . . . . . . . . . . . . . . . . . . . . . . . .  28


                                      -i-
     <PAGE>

                                        PART I

          ITEM 1 - BUSINESS

          GENERAL

               Paramount Financial Corporation and subsidiaries
          ("Paramount" or the "Company") is a comprehensive business
          solution provider, offering customers a wide range of integrated
          services, including lease finance, information technology ("IT")
          consulting, network design and implementation, and staffing
          services.  The Company was formed in 1991 and includes two wholly
          owned subsidiaries, Paratech Resources, Inc. ("Paratech") and
          Deltaforce Personnel Services, Inc. ("Deltaforce").

               The evolution of Paramount from a high technology equipment
          leasing and trading company to a full service business solution
          provider began in 1996.  During the first quarter of that year,
          in response to the Company's need to provide its customers with
          more value added services, the Company created a new wholly owned
          subsidiary, Paratech Resources, Inc.  Paratech offers customers a
          full IT service solution, including hardware, software, system
          design, integration and other value-added support services for
          the local area and wide area network (LAN and WAN) environment.

               In an effort to further enhance and expand its network
          integration services and solutions business, Paratech acquired
          Comptech Resources, Inc. ("Comptech") in October 1998.  Comptech
          is a systems consulting, software application, Year 2000
          compliance and Internet commerce development firm.  The
          acquisition of Comptech brings to Paramount a specialization in
          client-server accounting, sales-force automation, web development
          and e-commerce applications, which when combined with Paratech's
          systems integration and consulting services, enables the Company
          to offer a full complement of state-of-the-art technology
          solutions.

               The Company's strategic diversification and expansion plans
          also resulted in two other acquisitions during 1998.  In January
          1998, the Company completed the acquisition of Deltaforce
          Personnel Services, Inc., a privately held New York City based
          staffing company specializing in legal support staff.  This
          acquisition further enhanced the Company's product offerings by
          including staffing services to its expanding list of integrated
          services.  The Deltaforce acquisition was followed in August by
          the acquisition of RBW Staffing Services, Inc. (d/b/a WordSmiths)
          ("WordSmiths"), a New York City based staffing company also
          specializing in legal support staff.  Following this second
          acquisition, the Company merged the operations of WordSmiths into
          Deltaforce to form "The DeltaGroup."  As a result of the
          Deltaforce and WordSmiths acquisitions, the Company now offers
          not only temporary legal support staff, but also temporary and
          permanent IT, attorney and paralegal placements. 

               Throughout this period of strategic expansion and
          diversification, the Company maintained its lease portfolio and
          in 1998 selectively engaged in new lease transactions.  The
          Company believes that in acting as an integrated lessor and
          business solution provider, it is well positioned to meet the
          ever-changing needs of its customers.


     <PAGE>

               During the three years ended December 31, 1998, the Company
          has generated over $100 million of new lease business.  Due to
          the large dollar size of the Company's leasing transactions, the
          majority of the Company's revenues for fiscal 1998 and 1997
          continue to be from leasing and lease related transactions.


          SYSTEM INTEGRATION AND CONSULTING BUSINESS

          Industry Background

               Technology is more important in business than ever before,
          since almost every aspect of an organization is dependent on
          computer and information technology.  As a result, IT
          infrastructure has become a vital element of an organization's
          long-term business strategy.  However, in today's competitive
          business environment, the Company believes that most
          organizations are focused on their core competencies and not on
          managing and maximizing the return on their investment in
          technology.  Thus, the Company believes that the need is
          increasing for the expertise of companies such as Paratech to
          help businesses through this process.       

               The Gartner Group, a leading computer industry analyst,
          estimates that the average cost of a corporate customer
          acquiring, maintaining, supporting and disposing of a networked
          PC is approximately $41,000 over a five year period.   Thus, more
          than ever, companies are struggling for cost-effective solutions
          that bring order to this ever-changing situation, and the Company
          believes that many businesses will continue to recognize that
          they cannot achieve this on their own.  The Company believes that
          businesses are looking for solution providers that can offer them
          a full spectrum of services that will ultimately lead to a lower
          cost of ownership of their IT assets. 

               Systems integration includes designing systems and
          integrating hardware, software and communications.  According to
          the International Data Corporation, a computer industry research
          firm, the systems integration market will grow to nearly $27
          billion by the year 2000.  This growth is being driven by several
          factors, including the proliferation of distributed computing
          applications, the increased reliance on network computing, and
          the trend for companies to outsource network management
          responsibilities to companies such as Paratech.

               The U.S. Department of Commerce reported that 100 million
          people logged onto the Internet in 1997, up from 40 million in
          1996.  The Internet is dramatically changing the way companies do
          business making electronic commerce an essential tool for any
          business.  Companies that implement Internet commerce sites
          require professionally designed web sites, reengineered business
          processes, integration with their back-office, and scalable
          transaction systems.  These companies generally lack the skills,
          systems and expertise to effectively launch and manage the
          increasingly sophisticated network systems and support
          infrastructure required to conduct electronic commerce.  More
          than ever these companies are reaching out to industry experts
          such as Paratech.


                                      2
     <PAGE>

          Operations

               The Company's system integration and consulting business is
          conducted through Paratech Resources Inc. 

               Paratech's mission is to assist and support companies in
          designing computer networks that cater to their individual needs
          and to implement these systems in a cost-effective manner. 
          Paratech ensures that these systems support a company's business
          goals by staying closely attuned to each client's environment in
          order to provide the strategy and consulting required to achieve
          their goals.  Paratech offers a full range of comprehensive
          technology solutions, including network design and integration,
          software applications, system training and value-added support.

               Nineteen ninety-eight was a year of great expansion for
          Paratech.  Paratech significantly broadened its sales and
          technical staff and the range of its product offering with the
          acquisition of Comptech.  Comptech brings to Paratech a
          specialization in Great Plains client-server accounting software,
          Goldmine sales-force automation software, web development and e-
          commerce applications, which when combined with Paratech's pre-
          existing systems integration and consulting services, enables the
          Company to offer a full complement of state-of-the-art technology
          solutions.    

               Paratech is platform independent and thus can provide
          customers with the latest technology and flexible financial
          alternatives.  Because companies want both value and fast
          delivery of their products, Paratech sifts through the barrage of
          products and equipment to offer the most extensive and complete
          solutions to its customers. Paratech works with its customers to
          develop strategies governing when to acquire equipment, upgrade
          existing equipment and order new equipment to take advantage of
          current technology.  The Company believes that a single source
          solution enables the customers to use fewer vendors while
          providing a more efficient integration, thereby reducing costs,
          minimizing risk, and increasing management control and
          accountability.

               Furthermore, through Paramount, the Company can offer its
          customers lease financing for all of the products and services
          that it sells through Paratech.  The Company believes that this
          "vertical integration" provides Paratech with a significant
          competitive advantage in the system integration market. 
          Customers of Paratech are provided with a total technology and
          financial solution which will allow them to assess their IT costs
          in terms of a fixed monthly rate, rather than a large one-time
          cash outlay.

          Competition

               Paratech competes against major hardware distributors and
          national and regional consulting and service organizations.  The
          Company believes that it is able to compete in this market due to
          the technical expertise of its employees, its focus on customer
          service, and its relationship with equipment manufacturers and
          vendors.  In addition, the Company believes its ability to act as
          a sole source provider offering all components of an IT solution,


                                      3
     <PAGE>

          from hardware and infrastructure to specific application software
          and Internet design and implementation, provides it with a
          competitive advantage.  

          Customer Concentration

               Paratech's typical customers are mid-size regional
          organizations with ongoing IT infrastructure needs.  The Company
          believes that Paratech's business is not dependent on any single
          customer.  For the year ending  December 31, 1998, the three
          largest customers of Paratech accounted for 21.0% of total sales. 
          The loss of any of these major customers could have a material
          adverse effect on the Company's business, financial condition and
          results of operations. 

          STAFFING SERVICES BUSINESS

          Industry Background

               The temporary staffing industry, once used predominately as
          a short-term solution for peak production periods and to
          temporarily replace absent workers, has evolved into a permanent
          and significant component of the staffing plans of many
          companies.  Corporate restructuring, downsizing, increased
          government regulations governing employee relations, advances in
          technology, and the desire by many companies to shift employee
          cost from a fixed to a variable expense have contributed to the
          strong growth of the temporary staffing industry.  Temporary
          staffing firms act as intermediaries in matching available
          temporary workers to employer assignments.  According to the
          Staffing Industry Report, an industry research firm, the
          temporary staffing industry was a $54.5 billion industry in 1997,
          and was estimated to reach $62.9 billion in 1998. Of this total,
          office/clerical and IT, the two segments in which the Company
          operates, accounted for $29.0 billion in 1997 and are estimated
          to reach $35.6 billion in 1998.

          Operations

               The Company entered the temporary staffing business in 1998
          with the acquisition of Deltaforce Personnel Services Inc. 

               Deltaforce, which commenced operations in 1988, is a
          provider of temporary legal-support staff to the legal community
          in the New York City metropolitan area.  Deltaforce's typical
          clients are large New York City based law firms with on-going
          needs for temporary personnel services.  The Company's
          acquisition of Deltaforce was followed closely by the acquisition
          of WordSmiths in August.  WordSmiths is an 11-year old staffing
          firm providing law firms with support staff, proofreaders, legal
          professionals and paralegals, and its services are a strong
          complement to the legal services of Deltaforce.  Following this
          second acquisition, the Company merged the operations of
          WordSmiths into Deltaforce to create The DeltaGroup.  The
          combined company now offers not only temporary legal support
          staff, but also temporary and permanent IT, attorney and
          paralegal placements.  The Company believes that The DeltaGroup
          is now among the top five temporary staffing companies to the
          legal community in New York City.


                                      4
     <PAGE>

               Following the acquisition of Deltaforce, the Company made a
          considerable investment in systems and process improvements to
          create a new and improved infrastructure to enhance client
          servicing, applicant recruitment and overall productivity. These
          systems, which are specific to the staffing industry, provide The
          DeltaGroup with the platform to grow without incurring additional
          administrative costs.  With the integration of WordSmiths into
          the Deltaforce operation, the company was able to realize
          economies of scale concurrent with improving overall performance
          and serving the growing client base more efficiently.

               In the temporary staffing industry, quality of service is
          generally a function of two things: (i) the ability to
          effectively match an individual worker to a specific assignment,
          and (ii) the promptness with which the assignment is filled.  The
          Company believes that the experience of its management and
          internal staff and its standing in the market allows it to
          effectively access a large supply of available temporary workers,
          select suitable individuals for a particular assignment and, in
          some cases, train available workers in skills required for an
          assignment.

          Competition

               The DeltaGroup competes against local and national temporary
          personnel firms, both to recruit and retain a supply of worker
          and to attract customers to use temporary employees. Many of the
          firms that the Company competes with have greater financial
          resources available for marketing and advertising as well as a
          larger pool of potential candidates to fill positions.  The
          Company believes that it can compete against these firms due to
          the experience of existing management, the relationships that it
          has maintained over the years, and the reputation that it holds
          in the market for providing high quality service.  The Company
          recruits temporary workers through a wide variety of means,
          principally personal referrals and advertisements.  In addition,
          The DeltaGroup has installed a new state-of-the-art computer
          system specifically designed for the temporary personnel
          industry, which allows it to effectively match candidates with
          assignments in a timely and efficient manner.  Further, as a
          result of The DeltaGroup's affiliation with Paratech, the Company
          believes The DeltaGroup can create additional opportunities to
          place candidates in IT related disciplines.

          Customer Concentration

               The DeltaGroup's typical clients are large New York City
          based law firms with on-going needs for temporary personnel
          services.  The Company believes that its business is not
          dependent on any single customer.  For the year ending December
          31, 1998, the three largest customers of The DeltaGroup accounted
          for 17.1% of total sales.  The loss of any of these major
          customers could have a material adverse effect on the Company's
          business, financial condition and results of operations.


                                      5
     <PAGE>

          LEASE FINANCE BUSINESS

          Industry Background

               The large system computer industry has been characterized by
          frequent technological advances resulting in cost reductions,
          increases in computer processing capacity and broadened user
          applications. The introduction of new models generally does not
          result in equipment currently in service becoming technologically
          obsolete, but usually causes the price of existing equipment to
          decrease, reflecting the increased performance and
          cost-effectiveness of newer equipment. Users frequently replace
          or upgrade equipment as their existing equipment becomes
          inappropriate for their needs or as increased data processing
          capacity is required. 

               Many end-users prefer to lease, rather than purchase,
          computer equipment. Leasing provides the flexibility to upgrade,
          add or replace equipment during or at the end of the initial
          lease term; provides financing advantages, such as the
          elimination of initial cash outlays and lower monthly payments;
          does not result in a preference item for purposes of the
          alternative minimum tax; places the risk of loss of residual
          value on the lessor rather than the lessee; and permits the
          lessee to account for operating leases as off-balance-sheet
          financing thereby leaving the lessee's borrowing ability, debt to
          equity ratio and current liabilities unaffected. 

               As more end-users become aware of the economic benefits of
          leasing, they often turn to independent leasing companies.
          Independent lessors, such Paramount, offer tailored financing and
          flexible delivery, and can deliver financing for mixed systems
          from different vendors. Responding to customers' demands, leasing
          companies are becoming increasingly more flexible in terms of
          lease duration, equipment upgrades and payment options. By more
          accurately assessing the residual value associated with the price
          of equipment, lessors have become better able to fine tune the
          fixed monthly payment amount. 

               According to the U.S. Department of Commerce "trends and
          forecasts for equipment leasing in the US",  it is estimated that
          nearly $180 billion worth of equipment was leased in 1997 with a
          forecasted amount of $183.4 billion in 1998.  Of the total
          equipment leased in 1997, nearly $10.5 billion was computer and
          computer related products.

          Operations 

               The Company's leasing operations involve the leasing of new
          or used high technology equipment to computer end-users
          nationwide. The majority of the Company's end-user customers are
          Fortune 1000 and equivalent companies with large data processing
          needs. The Company offers its customers a variety of choices for
          their data processing needs, including equipment manufactured by
          IBM, Hitachi Data Systems, Amdahl Corporation, EMC Corporation,
          Sun Microsystems Inc., Hewlett-Packard Co., Storage Technology
          Corp. and Xerox Corp., and includes mainframe and midrange
          central processing units, peripheral devices, upgrades and
          component parts; client servers; LAN and WAN equipment;
          telecommunications equipment; and personal computers.


                                      6
     <PAGE>

               Furthermore, through the Company's system integration
          business, Paramount is positioned to offer lease finance
          arrangements to customers of Paratech.  The Company views this
          "vertical integration" as not only a strategic advantage for
          Paratech, but also as an additional source of obtaining quality
          assets and customers for the Paramount lease portfolio.  As the
          business of Paratech continues to expand, the Company anticipates
          that a significant portion of its new lease business will come
          from transactions originated by Paratech.
           
               The Company's objective is to conduct its leasing business
          with customers whose creditworthiness permits the Company to
          obtain long-term, non-recourse, fixed rate financing for its
          lease transactions.  All of the Company's equipment leases are
          noncancellable, place the risk of damage or destruction to the
          equipment on the lessee, have original terms typically ranging
          from 24 to 60 months and are governed by a master lease agreement
          (the "Master Lease"). The specific terms of each Master Lease
          vary, but each creates a triple net lease obligation on the part
          of the lessee. A Master Lease is an important marketing tool for
          Paramount because it allows for multiple lease transactions with
          the same customer without having to re-execute a new lease
          agreement. Instead, each lease is documented by an equipment
          schedule, which incorporates the terms of the Master Lease,
          providing customers of Paramount with an easy and efficient means
          of leasing equipment over time. 

               To minimize its cash investment in lease transactions, the
          Company typically enters into non-recourse, fixed rate lease
          financing with banks or other financial institutions. In
          connection with such loans, the Company will (i) directly assign
          to the lender providing financing the rental stream from the
          lease, and (ii) grant that lender a security interest in the
          equipment subject to the lease. In exchange for these
          assignments, the Company receives up front from the lender a lump
          sum payment equal to the discounted present value of the lease
          payments, based on an interest rate commensurate with the
          lessee's credit rating. In the event of the lessee's default, the
          lender can look only to the lessee and the equipment for
          repayment and not to the Company, unless the Company is in breach
          of a material representation or warranty under the loan. Since
          its inception, none of the Company's lessees have defaulted under
          their leases. Throughout the term of the lease, the Company
          retains title to the equipment. 

               In connection with its leasing of computer products to its
          end-user customers and depending on the type of computer
          equipment involved, the Company's relationship with the end-user
          and the term of the lease, the Company may make a "residual
          value" investment in these leased assets. A residual value
          investment represents the difference between the acquisition cost
          of the leased asset to the Company and the discounted present
          value of the rental stream from the lessee. The Company plans to
          maximize the return on its residual value investments through
          creative and diligent remarketing activities, including mid-term
          extensions, upgrades and early terminations. 

               Prior to or at the expiration of the initial lease term, a
          lessee will often reassess and evaluate its high technology
          needs. To this end, the Company consistently works with its
          customers to develop strategies governing when to acquire
          equipment, upgrade existing equipment and order new equipment to
          take advantage of current technology. On many occasions, the
          lessee will renew or extend its lease and add to or otherwise


                                      7
     <PAGE>

          enhance the original equipment configuration. As a result, a
          substantial portion of the Company's transactions are with repeat
          customers. 

               The Company's remarketing strategy is to keep its equipment
          in place at the end of the initial lease term.  Prior to the
          expiration of the original lease term, the Company initiates the
          remarketing process for the related equipment.  Typically,
          remarketing equipment in place produces better residual returns
          than selling or leasing the equipment to a third party.  The
          Company is able to maximize its revenues and residual return by
          focusing its efforts on keeping the equipment in place at the end
          of the initial lease term.  In addition, leased equipment is
          frequently upgraded and enhanced during the term of the lease,
          and the Company looks to extend the term of the lease while
          providing these upgrades.

               The focus of the Company's activities with respect to
          particular models of computer equipment changes periodically as a
          result of changes in market conditions and advances in computer
          technology. New product introductions and deliveries have
          historically created opportunities to arrange leases, re-market
          displaced equipment and provide upgrades.  The Company believes
          that its relationship with Paratech will provide the greatest
          lease opportunities for Paramount in the future.

               The Company maintains several informal relationships with
          banks and other financial institutions for the purpose of
          discounting lease transactions on a non-recourse basis. These
          banks and financial institutions are in the business of
          discounting lease transactions and actively look to acquire
          transactions that meet their criteria of credit quality,
          transaction size, term, documentation and rate. Prior to
          committing to a lease transaction, the Company reviews the
          creditworthiness and other key characteristics of the lease and
          discusses the same with one or more of these banks or financial
          institutions in an attempt to get prior approval for the
          transaction, thereby avoiding the possibility of the Company
          committing to a transaction that it would be unable to finance.
          To the extent that a time lag exists between the date that the
          Company must pay its vendors for the equipment to be leased and
          the date that the non-recourse lease financing is funded, the
          Company can and in limited circumstances has used its bridge
          financing lines.  In addition, the Company has entered into
          recourse financing arrangements whereby certain financial
          institutions finance the residual value investment of certain
          equipment on lease.  See "Management's Discussion and Analysis of
          Financial Condition and Results of Operations Liquidity and
          Capital Resources." 

               The Company plans to selectively expand its computer lease
          portfolio, while also repositioning Paramount to act as the
          financing division for transactions generated by Paratech. 

               The Company believes that it can considerably mitigate the
          risks associated with residual value investments. The Company
          intends to make these residual value investments on a
          conservative and select basis. These investments will be made at
          accounts where the Company has developed a strong working
          relationship with the data processing and financial officers. The
          residual value investment will be based heavily on this
          relationship and the end-user's historical tendencies to either
          upgrade equipment and extend leases prior to expiration, or to
          return equipment at lease expiration. In addition, the Company


                                      8
     <PAGE>

          will utilize its experience in computer hardware in determining
          the extent of its residual value investments. Each situation will
          be analyzed separately with particular focus on the possible
          upgrade paths of the hardware, the potential for technological
          changes which may reduce the comparative efficiency of the
          equipment, and the Company's knowledge of the end-users and their
          likely growth plans for the future. In addition, the Company will
          consult with published reports by independent appraisal services
          to gauge its investments. On an annual basis, the Company will
          compare its residual investments to these published reports and
          make write-downs if a reduction in value is deemed to be
          permanent. 

               The Company's strategy is to create a diversified portfolio
          of computer hardware at high quality end-user accounts in various
          industries. By diversifying along product lines, expiration date
          and end-user accounts, the Company believes that it protects
          itself against any one product, customer or industry experiencing
          a significant downturn. In addition, the Company intends to take
          a pro-active approach to managing its portfolio of computer
          equipment on lease. This involves consistently meeting with users
          and understanding their particular needs. A significant component
          to this approach is the management of information regarding the
          portfolio. By diligently monitoring its portfolio, keeping aware
          of new product availability and trends, and maintaining strong
          working relationships with its end-user customers, the Company
          believes that it can minimize the costs associated with making
          residual value investments and maximize the profit of owning the
          assets. 

               The Company, like other competing computer sales and leasing
          companies, does not grant any warranties on the products it sells
          or leases. However, most of the new and used computer equipment
          which the Company sells and leases is covered under either the
          manufacturer's warranty or the manufacturer's maintenance
          program, or is acceptable to be covered under the manufacturer's
          maintenance program, and the Company represents this status to
          the buyer. Prior to buying any used equipment, the Company
          obtains a guarantee from the seller that the equipment is
          acceptable under the manufacturer's maintenance program. Under
          each Master Lease, all costs associated with product maintenance
          must be borne and undertaken by the lessees. 

          Competition

               The computer leasing industry is characterized by intense
          competition. Companies compete for accounts through a variety of
          factors. The Company believes it competes on the basis of price,
          responsiveness to customer needs, flexibility in structuring
          lease transactions, relationships with customers and vendors and
          knowledge of the equipment.  Further, the Company has a network
          of lenders to discount the rental streams at what the Company
          believes are favorable competitive rates.  In addition, the
          Company believes that it has an efficient back office operation
          which allows it to keep its overhead low, thus requiring a lower
          sales threshold on each transaction. Another important
          competitive factor is customer service. The Company has attempted
          to take a "hands-on" approach with its customers in order to
          build and maintain long-term, mutually beneficial relationships,
          and the Company believes that this relationship-building approach
          has distinguished Paramount from some of its competitors. In
          addition, as an independent lessor and trader of equipment,
          Paramount is able to deliver a wide variety of equipment to its
          customers on a timely basis.


                                      9
     <PAGE>

               The Company's continued ability to compete effectively may
          be affected by the policies of IBM, Hitachi and other computer
          manufacturers. The Company attempts to provide customers with a
          diverse selection of products, a high level of customer service,
          the knowledge and competence of its employees and competitive
          pricing. The Company believes that the knowledge and experience
          of its executive officers and the relationships that they have
          fostered in the industry will continue to provide the Company
          with competitive advantages in the marketplace.

          Customer Concentration

               The Company's typical leasing customers are large,
          creditworthy corporations that require several million dollars of
          equipment per year and are repeat customers of the Company. 
          Repeat business generated through existing relationships is an
          important source of revenue for the Company.  While the Company
          believes that its business is not dependent on any single
          customer, as of December 31, 1998, the three largest lessees of
          the Company accounted for 87.1% of the original acquisition cost
          of all equipment leases owned and managed as of such date.  The
          loss of any of these major customers could have a material
          adverse effect on the Company's business, financial condition and
          results of operations.

          EMPLOYEES

               As of December 31, 1998, the Company employed 53 full-time
          employees and 536 temporary part-time employees. The Company has
          experienced no work stoppages and considers its employee
          relations to be satisfactory. None of the Company's employees are
          represented by a labor union. 


          GOVERNMENT REGULATION

               The Company has not been materially affected by any
          government regulations applicable to its business activities.

                                      10

      <PAGE>

          ITEM 2 - PROPERTIES

          PROPERTIES

               The Company leases approximately 2,734 square feet of office
          space for its principal executive offices at One Jericho Plaza,
          Jericho, New York 11753. Payment of rent for the Company's
          offices is approximately $6,000 per month.  This lease expires in
          August 1999.  The Company intends to lease a larger space for its
          executive offices upon termination of this lease, the rent for
          which is expected to be at a higher monthly rate.

               In addition, the Company leases 6,000 square feet in
          Manhattan for The DeltaGroup operations.  Payment of rent is
          approximately  $13,000 per month.  This lease expires in November
          2002.


          ITEM 3 - LEGAL PROCEEDINGS

               There are no material legal proceedings pending against the
          Company. 


          ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

               No matters were submitted to a vote of security-holders
          during the fourth quarter of the fiscal year ended December 31,
          1998.

                                      11
      <PAGE>


                                    PART II

          ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
                   STOCKHOLDER MATTERS

               The Company's Common Stock and Class A Warrants began
          trading separately on the Nasdaq SmallCap Market under the
          symbols "PARA" and "PARAW," respectively, on January 22, 1996,
          the date of the Company's initial public offering.  The following
          table sets forth the high and low closing prices for the
          Company's Common Stock for the periods shown below.  Prices shown
          for periods prior to May 19, 1998 have been adjusted to reflect
          the Company's one-for-four reverse stock split at that time.

           COMMON STOCK
               1997                                      High       Low
               ----                                      ----       ---
               First quarter . . . . . . . . . . . .    $3 1/8  $1 1/2
               Second quarter  . . . . . . . . . . .         3     1/4
               Third quarter . . . . . . . . . . . .     4 3/8   1 1/2
               Fourth quarter  . . . . . . . . . . .     4 1/8   2 1/8


               1998                                      High       Low
               ----                                      ----       ---
               First quarter . . . . . . . . . . . .     2 3/4   1 1/2
               Second quarter  . . . . . . . . . . .    2 5/16  1 1/16
               Third quarter . . . . . . . . . . . .    1 3/16   19/32
               Fourth quarter  . . . . . . . . . . .     29/32    7/16


               1999
               ----
               January 1, 1999 through March 18, 1999        6   17/32

           As of August 20,  1998, the Class A Warrants were delisted from
           the Nasdaq SmallCap Market as a  result of the failure  to meet
           the minimum market maker requirement.   Set forth below in  the
           first table are the  high and low closing prices for the  Class
           A  Warrants as  reported  by  the Nasdaq  SmallCap Market  from
           January 1, 1997  through August 20,  1998.  Set forth  below in
           the  second table  are the  high and  low sales  prices for the
           Class A  Warrants as  reported by  the Nasdaq  Over-The-Counter
           Bulletin Board since August 21, 1998.

           CLASS A WARRANTS
                               NASDAQ SMALLCAP MARKET
               1997                                      High       Low
               ----                                      ----       ---
               First quarter . . . . . . . . . . . .     $5/32     $3/97
               Second quarter  . . . . . . . . . . .      3/32      3/97
               Third quarter . . . . . . . . . . . .      3/16      3/97
               Fourth quarter  . . . . . . . . . . .      3/16      1/16

                                      12
<PAGE>

               1998
               ----
               First quarter . . . . . . . . . . . .      1/8       3/32
               Second quarter  . . . . . . . . . . .      3/32      1/32
               Third quarter (July 1 August 20)  . .      1/32      1/64

                       NASDAQ OVER-THE-COUNTER BULLETIN BOARD

               1998                                      High       Low
               ----                                      ----       ---
               Third Quarter (beginning August 21)(1)    DNT        DNT
               Fourth Quarter(1) . . . . . . . . . .     1/200    1/200

               1999
               ----
               January 1, 1999 through March 18, 1999     1/4     1/500
      ______________________
      1  After being delisted from the Nasdaq SmallCap Market, the Class A
         Warrants did not begin trading on The Over-The-Counter Bulletin Board
         until December 1998. 

               The closing sales price of the Common Stock as of March 18,
          1999, as reported by the Nasdaq SmallCap Market, was $2-5/32 per
          share.  The closing sales price of the Class A Warrants as of
          March 19, 1999, as reported by the Nasdaq Over-The-Counter
          Bulletin Board, was $0.01 per Warrant. 

               As of March 18, 1999, there were 40 record holders of the
          Common Stock.


                                      13
     <PAGE>

          ITEM 6 - SELECTED FINANCIAL DATA

     <TABLE>
     <CAPTION>
                           -----------------------------------------------------
                           1994        1995        1996         1997        1998
                           ----        ----        ----         ----        ----
      <S>            <C>         <C>         <C>        <C>           <C>
      REVENUES:

      Sales and
      service . . . . $25,290,524 $30,857,949 $27,159,894 $21,405,788  $30,391,446

      Lease revenue .   2,592,531   2,147,358   3,680,924   9,829,991    7,478,750

      Fee, interest
       and other          109,247     162,873     511,698   1,159,062      615,295
       income . . . .  ----------  ----------  ----------  ----------   ----------

                       27,992,302  33,168,180  31,352,516  32,394,841   38,485,491
      Total revenues   ----------  ----------  ----------  ----------   ----------

      COSTS AND EXPENSES:

      Cost of sales .  23,540,952  28,955,984  25,785,022  19,933,213   28,157,266

      Lease expense .   2,091,361   1,828,412   3,419,600   9,499,365    7,172,273

      Selling,
       general and
       administrative
       expenses . . .   1,680,601   1,805,499   2,447,884   3,746,712    4,947,718

      Interest                  -   5,284,756       6,209           -       51,324
       expense  . . .  ----------  ----------  ----------  ----------   ----------

      Total costs and  27,312,914  37,874,651  31,658,715  33,179,290   40,328,581
       expenses . . .  ----------  ----------  ----------  ----------   ----------

      Income (loss)
       before provision
       for (benefit
       from) taxes  .     679,388  (4,706,471)   (306,199)   (784,449)  (1,843,090)

      Provision for
       (benefit  
       from) income        33,706      21,850     498,212    (288,111)      (9,286)
       taxes  . . . .  ----------  ----------  ----------  ----------   ----------

      Net income       $  645,682 $(4,728,321) $ (804,411) $ (496,338) $(1,833,804)
       (loss) . . . .  ==========  ==========  ==========  ==========   ==========

      Basic loss per
       common share .                              ($0.41)     ($0.25)      $(0.89)
                                               ==========  ==========   ==========

      Diluted loss
       per common                                                         
       share  . . . .                              ($0.41)      (0.25)      $(0.89)
                                               ==========  ==========   ========== 

      Shares used in
       computing net
       loss per share:
         Basic                                  1,954,493   1,991,117    2,067,842
                                               ==========  ==========   ==========
         Diluted                                1,954,493   1,991,117    2,067,842
                                               ==========  ==========   ==========

     </TABLE>


                                      14
     <PAGE>


                                        1994           1995           1996
                                        ----           ----           ----

      BALANCE SHEET DATA:

      Total assets  . . . . . . .    $8,128,970    $12,378,585    $51,561,520

      Obligations for financial
        equipment - non-recourse      5,152,274      9,337,883     23,461,175

      Shareholders' equity  . . .       851,999        568,718      8,171,386

      LEASE PORTFOLIO DATA:

      Net investment in direct
       finance and sales-type 
       leases . . . . . . . . . .     5,411,219      6,446,063     20,942,542

      Assets held under operating
       leases, net of accumulated
       depreciation . . . . . . .       846,126      3,976,209     21,103,033



                                        1997           1998
                                        ----           ----

      BALANCE SHEET DATA:

      Total assets  . . . . . . .   $53,062,461      $45,246,610

      Obligations for
       financial 
       equipment - 
       non-recourse . . . . . . .    40,287,404       33,435,459

      Shareholders' equity  . . .     7,645,683        5,797,139

      LEASE PORTFOLIO DATA:

      Net investment in
       direct finance
       and sales-type
       leases . . . . . . . . . .    39,941,764       30,059,378

      Assets held under
       operating leases,
       net of accumulated
       depreciation . . . . . . .     5,459,895        7,263,181




                                      15
     <PAGE>

          ITEM 7 -  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                    CONDITION AND RESULTS OF OPERATIONS

               The following discussion and analysis should be read in
          conjunction with, and is qualified in its entirety by, the
          audited financial statements, including the notes thereto,
          appearing elsewhere in this Form 10-K.

          GENERAL

               Paramount Financial Corporation and subsidiaries is a
          comprehensive business solution provider, offering customers a
          wide range of integrated services, including lease finance,
          information technology consulting, network design and
          implementation and staffing services.  The Company includes two
          wholly owned subsidiaries, Paratech Resources, Inc. and
          Deltaforce Personnel Services, Inc.

               During the year ended December 31, 1998, the Company
          continued with its strategic diversification and expansion plans. 
          In January, the Company completed the acquisition of Deltaforce
          Personnel Services, Inc., a privately held New York City based
          staffing company specializing in legal support staff. This
          acquisition further enhanced the Company's product offerings by
          including staffing services to its expanding list of integrated
          services.  The Deltaforce acquisition was followed closely by the
          acquisition of RBW Staffing Services, Inc. (d/b/a WordSmiths),
          another New York City based staffing company.  Following this
          second acquisition, the Company merged the operations of
          WordSmiths and Deltaforce, and the combined company (called The
          DeltaGroup) now offers not only temporary legal support staff,
          but also temporary and permanent IT, attorney and paralegal
          placements. 

               In addition to the Deltaforce and WordSmiths acquisitions
          during the year ended December 31, 1998, the Company continued to
          invest in the expansion of its systems integration subsidiary,
          Paratech.  Paratech continues to move ahead with its growth plans
          in both personnel and product offerings.  In October 1998, the
          Company completed the acquisition of Comptech Resources, Inc., a
          systems consulting, software application and Internet commerce
          development firm.  The acquisition of Comptech brought to
          Paramount a specialization in client-server accounting, sales-
          force automation, web development and e-commerce applications,
          which when combined with Paratech's systems integration and
          consulting services, enables the Company to offer a full
          complement of state-of-the-art technology solutions.  

               Both Paratech and The DeltaGroup are important parts of the
          evolution of Paramount from a lease finance company to a
          diversified business solution provider.  When comparing the year
          ended December 31, 1998 to the year ended December 31, 1997, it
          is important to note that The DeltaGroup and Comptech were not
          part of the Company in 1997.

               The Company remains committed to the growth of its lease
          portfolio and continued to engage in this activity during the
          year ended December 31, 1998.  The Company believes that
          continued expansion of the portfolio of IT equipment on lease
          will create financial benefits over a continuum of time, since,
          unlike other equipment, IT equipment is frequently upgraded


                                     16
     <PAGE

          and/or enhanced during the term of its lease, resulting in
          opportunities to lease new equipment and market displaced
          equipment.  Further, as an integrated lessor and business
          solution provider, the Company believes that it is well
          positioned to meet the ever-changing needs of its customers.


          FLUCTUATIONS IN QUARTERLY RESULTS

               The operating results of Paramount are subject to quarterly
          fluctuations resulting from a variety of factors, including the
          volume of new leases written, product announcements by
          manufacturers, economic conditions, interest rate fluctuations
          and variations in the mix of leases written.  In addition, the
          Company's revenue can fluctuate significantly from quarter to
          quarter based on the closing date and nature of each particular
          lease and/or sales transaction.  The mix of leases written in a
          quarter is a result of a combination of factors, including
          changes in customer demands and/or requirements, new product
          announcements, price changes, changes in delivery dates, changes
          in maintenance policies and pricing policies of equipment
          manufacturers and price competition from other lessors.  

               Leasing transactions (other than sales-type leases), in
          general, do not provide for significant earnings in the month of
          lease origination.  Instead, revenue, expense and profit from
          lease transactions are recorded over the life of the asset and
          the lease.  Lease revenue and lease expense recognition is
          dependent upon a number of factors, including the term of the
          lease, the accounting classification of the lease (i.e.,
          operating, direct finance, or sales-type) and the commencement
          date of the lease and the lease financing within a particular
          period.  See "Lease Accounting."

               The Company is aggressively working to maximize the returns
          on the residual value investments made on its lease portfolio. 
          Such efforts, which are an ordinary but not a predictable part of
          the Company's business, often result in equipment originally
          leased under an operating lease, and accounted for as described
          below, being upgraded or otherwise enhanced and extended at the
          original account or leased to a different end-user.  The
          resulting lease may qualify under Statement of Financial
          Accounting Standard No. 13, "Accounting for Leases" ("SFAS 13")
          as a sales-type lease, in which the Company can record as sales
          revenue the fair market value of the equipment and recognize as
          income the difference between this amount and the equipment's
          cost or net book value.  Since a sales-type lease is a form of
          direct finance lease, the new lease is recorded over its
          remaining term as a direct finance lease resulting in a reduction
          of lease rental income and lease expense compared to the original
          operating lease accounting.  

               Marketing efforts may also result in the sale of the leased
          asset to the customer which will result in an increase in
          revenue, and to the extent the sales proceeds exceed the net book
          value, net income, in the quarter in which the sale occurs.  Any
          such sale will also result in a reduction of revenue, expense and
          profit expected in subsequent quarters since the equipment was
          sold.


                                     17
     <PAGE>

               Given the possibility of such fluctuations as described
          above, the Company believes that comparisons of the results of
          its operations for preceding quarters are not necessarily
          meaningful and that such results for one quarter should not be
          relied upon as an indication of future performance.


          LEASE ACCOUNTING

               In accordance with SFAS 13, the Company classifies its
          leases as either operating leases or direct finance leases.  The
          allocation of income among accounting periods within a lease term
          will vary depending upon the lease classification, as described
          below.

               Direct Finance Leases:  Direct finance leases transfer
          substantially all benefits and risks of equipment ownership to
          the lessee.  A lease is a direct finance lease if it meets one of
          the following criteria: (i) the lease transfers ownership of the
          equipment to the lessee by the end of the lease term; (ii) the
          lease contains a bargain purchase option; (iii) the lease term at
          inception is at least 75% of the estimated economic life of the
          leased equipment; or (iv) the present value of the minimum lease
          payments is at least 90% of the fair value of the leased
          equipment at lease inception. 

               At lease inception, the cost of equipment under a direct
          finance lease is recorded as "Net investment in direct finance
          leases".  The difference between the gross lease payments
          receivable, plus the estimated residual value of the equipment,
          and the equipment cost is recognized as income over the life of
          the lease using the effective interest method.

               A lease transaction which meets all of the above criteria,
          and in which the Company has made a dealer's profit, is recorded
          as a "sales-type lease".  A sales type lease is a type of direct
          finance lease, but one in which the Company recognizes, at lease
          inception, revenue and profit which arises from the difference
          between the fair market value of the leased equipment and its
          acquisition cost.

               Operating Leases:  All lease contracts which do not meet the
          criteria of direct finance leases are accounted for as operating
          leases.  Monthly lease payments are recorded as operating lease
          revenue.  Leased equipment is recorded at the Company's cost and
          depreciated on a straight-line basis over the lease term to the
          estimated residual value at the expiration of the lease term. 

          RESULTS OF OPERATIONS

          YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31,
          1997

               The Company recorded a net loss for the year ended December
          31, 1998 of $1,833,800, after a benefit for income taxes of
          $9,300, as compared with a net loss of $496,300, after a benefit
          for income taxes of $288,100, for the year ended December 31,
          1997.


                                      18
     <PAGE>

               For the year ended December 31, 1998, the Company recorded
          sales and service revenue of $30.4 million, a $9.0 million
          increase over the $21.4 million recorded during the year ended
          December 31, 1997.  The increase was primarily a result of the
          transactional nature of the Company's leasing business and the
          resulting quarterly fluctuations.  See "General" and
          "Fluctuations in Quarterly Results."  Additionally, Paratech's
          revenue increased by 43% to $5.4 million when compared with 1997. 
          The DeltaGroup (comprised of Deltaforce and WordSmiths), which
          were not part of the Company in 1997, contributed $3.9 million in
          revenue during the 1998 year.

               As a result of the Company's ongoing marketing efforts with
          respect to its lease portfolio, certain assets which were
          recorded as operating leases during the year ended December 31,
          1997 have been upgraded and re-leased, providing the Company with
          a return on its residual value investment.  The resulting lease
          has been accounted for as a sales-type lease.  As a result of
          this activity, the effect of accounting for a lease as a direct
          finance lease versus an operating lease, net of new leases
          written in the fourth quarter, lease revenue and lease expense
          decreased for the year ended December 31, 1998 when compared to
          the year ended December 31, 1997 by 23.9% and 24.5%,
          respectively.  See "Fluctuations in Quarterly Results" and "Lease
          Accounting."

               During the year ended December 31, 1998, the Company entered
          into new lease transactions totaling $19.9 million of equipment
          cost as compared with $38.5 million for the year ended December
          31, 1997.  During the year ended December 31, 1998, the Company
          entered into $19.1 million of non-recourse lease financing
          arrangements, as compared with $38.5 million for the year ended
          December 31, 1997.  See "Liquidity and Capital Resources." 

               During the year ended December 31, 1998, the Company
          generated $615,000 in fee, interest and other income, compared to
          $1.2 million in 1997.  Generally, fee income is generated as a
          result of the Company's involvement in certain transactions in
          which it acted as an arranger of financing for leases originated
          by third parties, or otherwise assisted these companies in their
          lease related transactions.  These transactions come about as a
          result of the Company's relationship with other lessors and
          financial institutions.  The Company cannot predict with any
          certainty the timing and nature of any future such transactions. 
          See "General."

               Selling, general and administrative expenses ("SG&A")
          totaled $4.9 million for the year ended December 31, 1998,
          representing an increase of 32.0% over the $3.7 million recorded
          during the year ended December 31, 1997.  The increase in SG&A is
          attributed to the acquisitions of Deltaforce and WordSmiths,
          which contributed $1.3 million, as well as the acquisition of
          Comptech and the continued growth of Paratech, which contributed
          $1.4 million 

               The Company recorded a tax benefit of $9,300 for the years
          ended December 31, 1998 and 1997, respectively.  The income tax
          benefit for the year ended December 31, 1998 was reduced by a
          valuation allowance on the Company's net deferred tax asset.  The
          Company will continue to assess the fully reserved deferred tax
          asset each reporting quarter.  The benefit from income taxes of


                                      19
     <PAGE>

          $288,100 for the year ended December 31, 1997 reflects an
          effective tax rate of 37%.


          YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31,
          1996

               The Company recorded a net loss of $496,300 for the year
          ended December 31, 1997, as compared to a net loss of $804,400
          for the year ended December 31, 1996. The results for the year
          ended December 31, 1996 include a one time, non-cash adjustment
          of $430,400 to Provision for Income Taxes. This adjustment was
          necessitated by the change of the Company's tax status from a 
          Sub-Chapter S Corporation to a C-Corporation in connection with
          the Company's January 1996 initial public offering, and was made
          in accordance with Statement of Financial Accounting Standards
          No. 109.  The amount of the adjustment represents the cumulative
          deferred tax liability, which arose primarily from temporary tax
          differences with respect to depreciation, generated by the S-
          Corporation and payable in the future by the C-Corporation.  The
          net loss for the year ended December 31, 1997 was a result of the
          Company's continued investment in the growth and expansion of its
          system integration subsidiary, as well as the nature and timing
          of certain lease transactions.  See "General" and "Lease
          Accounting."  

               During the year ended December 31, 1997, the Company
          recorded $21.4 million of sales and service revenue, representing
          a decrease of $5.8 million over the $27.2 million recorded during
          1996.  The reduction in sales revenue was a result of a decrease
          in the dollar amount of sales type leases entered into during
          1997, and the continued shift in focus of the Company towards
          system integration sales.  See "General" and "Lease Accounting."

               Lease revenue, comprised of rental income from operating
          leases and interest income from direct finance and sales-type
          leases, increased by 167% to $9.8 million for the year ended
          December 31, 1997 from $3.7 million for the year ended December
          31, 1996.  Lease expense, which includes depreciation expense on
          operating leases, interest expense on lease financing and
          sublease rent expense, increased by 177% to $9.5 million for the
          year ended December 31, 1997 from $3.4 million for the year ended
          December 31, 1996.  These increases were a direct result of the
          Company's continuing efforts to expand its leasing portfolio. 
          See "General" and "Lease Accounting."

               During the year ended December 31, 1997, the Company entered
          into new lease transactions totaling $38.5 million of equipment
          cost.  Of this amount, $11.9 million was for sales-type leases
          for which the sales price and cost of equipment were recorded as
          sales revenue and cost of sales, respectively.  This compares
          with $53.7 million for the year ended December 31, 1996, of which
          $12.4 million was subsequently sold to an equipment investor,
          $21.8 million was recorded as direct finance or sales-type leases
          and $19.5 million was recorded as operating leases.  During the
          year ended December 31, 1997, the Company entered into $35.4
          million of non-recourse lease financing arrangements, net of
          terminations resulting from lease extensions, as compared with
          $21.6 million for the year ended December 31, 1996.  See
          "Liquidity and Capital Resources."


                                      20
     <PAGE>

               During the year ended December 31, 1997, the Company
          generated $1.2 million in fee, interest and other income,
          compared to $511,700 for the comparable period in 1996.  The
          Company generates fee income from commissions earned on third
          party lease financing transactions.  These transactions generally
          come about as a result of the Company's relationship with other
          lessors and financial institutions.  The Company cannot predict
          with any certainty the timing and nature of any future such
          transactions.  See "General."  Interest income is derived from
          the investment of the Company's cash balances in interest bearing
          cash accounts, cash equivalents and marketable securities during
          the periods ended December 31, 1997 and 1996.

               SG&A totaled $3.7 million for the year ended December 31,
          1997, representing an increase of 53.1% over the $2.4 million
          recorded during 1996.  The increase in SG&A was a result of the
          expansion of the operations of Paratech and the increased sales
          and support staff at the Company.  See "General."

               The benefit from income taxes of $288,100 for the year ended
          December 31, 1997 reflects an effective tax rate of 37% for
          federal and state taxes. The tax provision of $498,200 for the
          year ended December 31, 1996 represents the cumulative adjustment
          of $430,400, described above, plus a provision of  $67,800. 
          Prior to 1996, the Company was an S-Corporation and not subject
          to a corporate federal income tax.


          LIQUIDITY AND CAPITAL RESOURCES

               As of December 31, 1998, the Company had $2.1 million in
          cash and cash equivalents and investments available for sale. 
          Substantially all of this amount was invested in interest-bearing
          savings accounts, money market accounts established by major
          commercial banks or in United States Government, other AA rated
          obligations and mutual funds.  Primarily as a result of the
          acquisitions of Deltaforce, WordSmiths and Comptech, the
          continued investment in Paratech, and the Company's continuing
          investment in its portfolio of IT equipment on lease, the Company
          experienced a reduction in net cash and investments available for
          sale during  1998. 

               The Company continues to use its cash balances to fund its
          operations.  The Company believes that its businesses are now
          established and, accordingly, does not anticipate the need to
          invest significant additional cash.  However, in order to expand
          its operations, which the Company is aggressively seeking to
          accomplish, the Company will need to utilize its cash balances to
          fund potential future acquisitions.  The Company is limited to
          its current cash balances for funding such add-on acquisitions
          and internal growth, unless the Company is able in the future to
          raise significant additional financing.  There can be no
          assurance that the Company will be able to raise any such
          financing.  Further, the Company's cash funds for acquisitions
          might be limited to the extent that the Company's current
          operations or the operations of any future acquisitions require
          the funding of losses or the incurrence of capital outlay.


                                      21
     <PAGE>

               The Company's leasing business generates cash primarily from
          the marketing of equipment within its portfolio, and uses cash to
          acquire computer equipment to put on lease.  In addition, the
          Company's leasing business generates cash from fee related
          transactions.   The Company finances substantially all of its
          leases by discounting the payment stream on a non-recourse basis
          through various banks and financial institutions. Thus, the only
          cash required in these lease transactions is the residual value
          investment by the Company.  The Company believes that it
          currently has sufficient resources to make the residual value
          investments required to grow its lease portfolio.  In addition,
          the Company has numerous options available to finance residual
          value investments, including sales of equipment on lease to
          equipment investors, residual value sharing arrangements,
          recourse loans and non-recourse loans.  The Company intends to
          use, on an opportunistic basis, all such available resources in
          order to maximize its portfolio of equipment on lease. 

               During the year ended December 31, 1998, the Company entered
          into several residual value sharing and financing arrangements
          with an equipment investor totaling $856,000.  This investor (i)
          purchased a portion of the Company's residual value of equipment
          on lease in exchange for the right to share in remarketing
          proceeds generated from the equipment on lease, and (ii) provided
          recourse financing for the remaining portion of the Company's
          residual value investment.  The equipment on lease and the
          related leases serve as collateral for these financings.  During
          the year ended December 31, 1998, in connection with the early
          extension of leases, the Company repaid $1,580,000 of such loans
          using the proceeds of these extensions.  The Company expects to
          repay the balance of these loans through the proceeds generated
          from remarketing the subject equipment in the future.  These
          transactions allow the Company to continue to grow and expand its
          lease portfolio without significantly affecting its current cash
          balances.

               At December 31, 1998, the Company had three types of credit
          lines available:  

          Term Loan:  In April 1998, Paramount entered into a $500,000 term
          loan with a bank collateralized by $600,000 in cash maintained in
          an investment account.  Principal payments of approximately
          $41,600 and interest are due on a quarterly basis through April
          20, 2001.  As of December 31, 1998, approximately $417,000
          remained outstanding under this loan.

          Deltaforce Revolving Credit Facility:  Deltaforce has a $750,000
          revolving line of credit agreement with a bank secured by
          accounts receivable which expires on June 30, 1999.  Interest on
          outstanding borrowings accrues at the bank's prime rate plus 1%. 
          Borrowings are limited to 80% of eligible accounts receivable. 
          As of December 31, 1998, Deltaforce had $600,000 outstanding
          under this line. 

          Paratech Equipment Acquisition Credit Facility: Paratech has a
          $2,000,000 revolving line of credit agreement with a finance
          company secured by accounts receivable and inventory.  Interest
          on outstanding borrowings accrues at the prime rate plus 1 1/2%. 
          Borrowings are limited to 85% of eligible accounts receivable and
          99% of eligible inventory. This facility allows the Company to
          purchase computer hardware from its vendors with net 30-day terms
          interest free.  At the expiration of the net 30-day period, the
          Company has the option of paying the amount due or, provided the
          Company has sufficient eligible collateral, borrowing under the


                                      22
     <PAGE>

          credit facility.  As of December 31, 1998, Paratech had $464,000
          outstanding under this line.  

               In addition, in connection with the acquisition of Comptech,
          the Company assumed all outstanding obligations under a similar
          arrangement between Comptech and the same finance company.  The
          amount assumed, $2.2 million, is being repaid through the
          collection of Comptech's accounts receivable and the sale of
          their inventory.  As of December 31, 1998, approximately $440,000
          remained outstanding under this facility, but as of March 12,
          1999, $10,000 remained outstanding.  This facility must be repaid
          in full by July 23, 1999.  

               During the year ended December 31, 1997, the Board of
          Directors of the Company approved a plan that would allow for the
          repurchase of up to $500,000 worth of Common Stock of the
          Company.  The repurchase program took effect immediately and is
          authorized to continue for a period of two years.  Subject to
          applicable rules, the plan allows the Company to repurchase
          shares at any time during the authorized period in any increments
          it deems appropriate.  During the year ended December 31, 1998, 
          the Company repurchased 12,000 shares for a purchase price of
          $21,240


          IMPACT OF YEAR 2000 ISSUE

               Many existing computer programs use only two digits to
          identify a year.  These programs were frequently designed and
          developed without addressing the impact of the upcoming change in
          the century.  If not corrected, many computer software
          applications could fail or create erroneous results before, at or
          beyond the Year 2000.

               The Company has developed a Year 2000 Readiness Plan.  This
          plan addresses three main areas:  (a) information technology
          systems (including the Company's business systems, both
          hardware and software-related), (b) non-information technology
          systems (including embedded technology, such as microcontrollers,
          typically found in such equipment as telephone systems, fax
          systems, elevators, security systems, HVAC, etc.), and (c) supply
          chain readiness or third party issues (including customers as
          well as inventory and non-inventory suppliers).

               The Company has not identified any material potential
          deficiencies related to Year 2000 in its information technology
          systems.  The Company upgraded its business and computing system
          in 1997 and believes it is now Year 2000 complaint (based upon
          warranties from the Company's software providers).  The Company
          expects to complete testing (and, if necessary, remediation
          and/or replacement) of its internal systems in the second quarter
          of 1999.  In terms of non-information technology systems, the
          Company will be identifying those material items which may
          require remediation or replacement.  The Company is in the
          process of addressing those items and expects to complete testing
          (and, if necessary, remediation and/or replacement) of its non-
          information technology systems in the second quarter of 1999.

               As for third parties, the Company is in the process of
          identifying and contacting suppliers, both inventory and non-
          inventory, as well as customers.  This process includes the


                                      23
     <PAGE>

          solicitation of written responses to questionnaires and/or
          meetings with certain third parties.  With respect to the
          Company's network integration services and solutions business
          conducted through Paratech, the most significant focus is to sell
          to Paratech's customer Year 2000 compliant IT equipment, which
          Paratech accomplishes by deploying only Year 2000 level hardware
          and software.  With respect to Paramount's leasing business, in
          connection with the leasing of new IT equipment, the Company
          almost always leases such IT equipment from the largest
          manufacturers, thereby assuring that such equipment will be Year
          2000 compliant.  With respect to the leasing of older equipment
          coming off lease (or otherwise), such equipment is re-leased
          either as Year 2000 compliant or non-compliant, with the customer
          fully informed on the status (such re-leased equipment is
          frequently upgraded to Year 2000 compliance before re-leasing). 
          In any event, the Company, like other IT equipment leasing
          companies, does not grant any warranties on the equipment it
          leases, so that any Year 2000 problems ultimately are
          manufacturers responsibilities.

               Based upon the Company's current estimates, additional out-
          of-pocket costs associated with its Year 2000 compliance are not
          expected to be material.  These costs are anticipated to be
          incurred primarily in 1999 and include third party consultants,
          and remediation or replacement of embedded chips.  Such costs do
          not include internal management time and the deferral of other
          projects, the effects of which are not expected to be material to
          the Company's results of operations or financial condition.

               At this point in time, the Company believes that it is
          difficult to specifically identify the cause of the most
          reasonable worst case Year 2000 scenario.  As with many non-
          manufacturing/service-related businesses, a reasonable worst case
          scenario would be the result of Year 2000 failures of third
          parties (including, without limitation, governmental entities and
          entities with which the Company has no direct involvement) that
          continue for more than several days in specific industries from
          which the Company's inventory and components are sourced or to
          which the Company's products are sold.  In connection with the
          purchase of inventory and components, the Company is considering
          various contingency plans.  Continuing failures in these specific
          industries would limit procurement or delivery of product, and
          most likely would have a material adverse effect on the Company's
          results of operations.  The extent of such lost revenue cannot be
          estimated at this time; however, the Company is considering
          contingency plans to limit, to the extent possible, the effect of
          such lost revenue on the Company's results of operations.  Any
          such plans would necessarily be limited to matters over which the
          Company can reasonably control.


          FORWARD LOOKING STATEMENTS AND ASSOCIATED RISK

               Statements contained in this Form 10-K which are not
          historical facts are forward-looking statements.  The Forward-
          looking statements in this Form 10-K are made pursuant to the
          safe harbor provisions of the Private Securities Litigation
          Reform Act of 1995.  Forward-looking statements made herein
          contain a number of risks and uncertainties that could cause
          actual results to differ materially.  These risks and
          uncertainties include, but are not limited to, the specific
          factors impacting the Company's business discussed under the
          caption "General," as well as increased competition; the


                                      24
     <PAGE>

          availability of computer equipment; the ability of the Company to
          expand its operations and attract and retain qualified sales
          representatives experienced in the purchase, sale and lease of
          new and used computer equipment; the ability of the Company to
          attract and retain IT professionals skilled in specific
          applications; technological obsolescence of the Company's
          portfolio of computer equipment; competition in the IT consulting
          sector and general economic conditions

          INFLATION

               Inflation has not had a significant impact on the Company's
          operations.


          ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT 
                    MARKET RISK

               The Company's principal financial instrument is debt
          consisting of revolving lines of credit and notes payable that
          provide for interest at a spread above the prime rate.  The
          Company is affected by market risk exposure primarily through the
          effect of changes in interest rates on amounts payable by the
          Company under these credit facilities.  A significant rise in the
          prime rate could materially adversely affect the Company's
          business and financial condition.  At December 31, 1998, an
          aggregate principal amount of $2.8 million was outstanding under
          the Company's revolving lines of credit and notes payable, with
          spreads ranging from 0.25% to 1.5% over prime, and representing a
          weighted average interest rate of 9.15%.  If principal amounts
          outstanding under the Company's revolving lines of credit and
          notes payable remained at this year-end level for an entire year
          and the prime rate increased or decreased, respectively by 1.25%,
          the Company would pay or save, respectively, an additional
          $35,500 in interest in that year.   The Company does not utilize
          derivative financial instruments to hedge against changes in
          interest rates or for any other purposes.  The Company does not
          have any material foreign sales and all transactions are
          denominated in U.S. dollars.


          ITEM 8 -  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

               The audited financial statements of the Company for the
          fiscal year ended December 31, 1998 are located beginning at page
          F-1 of this Annual Report on Form 10-K.


          ITEM 9 -  CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS ON 
                    ACCOUNTING AND FINANCIAL DISCLOSURE

                         None.


                                      25
     <PAGE>

                                     PART III

          ITEM 10 - ITEM 13 - DOCUMENTS INCORPORATED BY REFERENCE

               Information with respect to Items 10, 11, 12 and 13 of Form
          10-K is hereby incorporated by reference into this Part III of
          Form 10-K from the Registrant's Definitive Proxy Statement
          relating to the Registrant's 1999 Annual Meeting of Stockholders
          to be filed by the Registrant with the Securities and Exchange
          Commission on or before April 30, 1999.

                                       PART IV

          ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
                    ON FORM 8-K

               The exhibits listed in the Index to Exhibits below are filed
          as part of this Annual Report on Form 10-K.

               (A)  EXHIBITS: 

               *3.1 - Restated and Amended Certificate of Incorporation
                      of the Registrant
               *3.2 - Amended on Restated By-laws of the Registrant
               *4.1 - Specimen Common Stock Certificate
               *4.2 - Form of Underwriter's Unit Purchase Option, as
                      amended
               *4.3 - Form of Class A and Class B Warrant Agreement, as
                      amended
               *4.4 - Specimen Class A Warrant Certificate
               *4.5 - Specimen Class B Warrant Certificate
              *10.1 - Employment Agreement between Registrant and
                      Jeffrey Nortman dated as of  January 22, 1996
              *10.2 - Employment Agreement between Registrant and Glenn
                      Nortman dated as of  January 22, 1996
              *10.3 - Employment Agreement between the Registrant and
                      Paul Vecker dated as of  January 22, 1996
              *10.4 - Form of Master Lease Agreement relating to
                      Computer Equipment Leases
              *10.5 - 1995 Stock Option Plan
             **10.6 - Stock Purchase Agreement dated January 6, 1998 by
                      and among Paramount Financial Corporation and
                      Lawrence P. Kagan and Steven Lippel relating to
                      Deltaforce Personnel Services, Inc.
              *10.7 - Form of Indemnification Agreement
              *10.8 - Sublease Agreement, dated September 15, 1995,
                      between the Company and Lehman Brothers Inc.
              *10.9 - Consent to Sublease, dated September 15, 1995,
                      among Chasco Company, Lehman Brothers Inc. and the
                      Company
             *10.10 - 1995 Director Option Plan


                                      26
     <PAGE>

             +10.11 - Stock Purchase Agreement dated October 23, 1998
                      between the Registrant and Abbey, Garrett & Seth,
                      Ltd. relating to Comptech Resources, Inc.
             +10.12 - Asset Purchase Agreement dated July 28, 1998
                      between the Registrant and RBW Staffing Services,
                      Inc. relating to WordSmiths
                +21 - List of Subsidiaries
                +27 - Financial Data Schedule

          -----------------------

          +    Filed herewith.
          *    Incorporated by Reference from the Registrant's Registration
               Statement on Form S-1, Registration No. 33-96382.
          **   Incorporated by reference from the Registrant's Form 10-K
               for the year ended December 31, 1997.

                    FINANCIAL STATEMENTS:  See Index to Consolidated
          Financial Statements on page F-1.

               (B)  REPORTS ON FORM 8-K

               The Company did not file any reports on Form 8-K during the
               fourth quarter of the fiscal year ended December 31, 1998.

               (C)  EXHIBITS

               The Exhibits set forth in (a) above are filed as part of
               this Annual Report on Form 10-K. 

               (D)  FINANCIAL STATEMENT SCHEDULES

               Information required by schedules called for under
               Regulation S-X is either not applicable or is included in
               the financial statements or notes thereto.


                                      27
     <PAGE>

                                      SIGNATURES

               Pursuant to the  requirements of Section 13 or  15(d) of the
          Securities Exchange Act of  1934, the Registrant has  caused this
          report to be signed  on its behalf by the  undersigned, thereunto
          duly authorized.


                                        PARAMOUNT FINANCIAL CORPORATION


          Dated:  March 26, 1999        By: /s/ GLENN NORTMAN
                                           ----------------------------
                                             Glenn Nortman,
                                             Chief Executive Officer


               Pursuant to the requirements  of the Securities Exchange Act
          of 1934, this  report has been signed by the following persons on
          behalf of the  Registrant and in the capacities and  on the dates
          indicated.



        Signature               Title                              Date
        ---------               -----                              ----

        /s/ GLENN NORTMAN
        ----------------------  Chief Executive Officer        March 26, 1999
        Glenn Nortman            and Director
                                (Principal Executive Officer)

        /s/JEFFREY NORTMAN
        ----------------------  Chief Operating Officer        March 26, 1999
        Jeffrey Nortman          and Director


        /s/ANTHONY FERNANDEZ    Director of Fiance             March 26, 1999
        ----------------------  (Principal Financial Officer 
        Anthony Fernandez        and Principal Accounting
                                 Officer


        /s/WILLIAM H. KELLY     Director                       March 26, 1999
        -----------------------
        William H. Kelly


        /s/LARRY AUSTIN
        ----------------------- Director                       March 26, 1999
        Larry Austin


                                      28
     <PAGE>

                    PARAMOUNT FINANCIAL CORPORATION AND SUBSIDIARY
                    ----------------------------------------------

                      INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                      ------------------------------------------

                                  DECEMBER 31, 1998
                                  -----------------
                                                   

                                                                       Page
                                                                       ----

        Report of Independent Public Accountants                        F-2

        Consolidated Balance Sheets as of December 31, 1997 and 1998    F-3

        Consolidated Statements of Operations for each of the three     F-4
         years ended December 31, 1998

        Consolidated Statements of Shareholders' Equity for each of     F-5
         three years in the period ended December 31, 1998

        Consolidated Statements of Cash Flows for each of the           F-6
         three years in the period ended December 31, 1998

        Notes to Consolidated Financial Statements                   F-7 - F-21




        Information required by schedules called  for under Regulation S-X is
        either not applicable or  is included in the financial  statements or
        notes thereto.


                                      F-1
     <PAGE>

                       REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS




        To Paramount Financial Corporation:


        We  have  audited the  accompanying  consolidated  balance sheets  of
        Paramount Financial  Corporation and subsidiaries as  of December 31,
        1997 and 1998, and the related consolidated statements of operations,
        shareholders' equity  and cash flows for  each of the  three years in
        the period ended December  31, 1998.  These financial  statements are
        the responsibility  of the Company's management.   Our responsibility
        is to express an opinion  on these financial statements based on  our
        audits.

        We  conducted  our  audits  in  accordance  with  generally  accepted
        auditing standards.  Those standards require that we plan and perform
        the audit to obtain reasonable  assurance about whether the financial
        statements  are  free of  material misstatement.   An  audit includes
        examining,  on a  test  basis, evidence  supporting  the amounts  and
        disclosures  in the  financial statements.    An audit  also includes
        assessing  the accounting  principles used and  significant estimates
        made  by management,  as  well as  evaluating  the overall  financial
        statement  presentation.    We  believe  that  our audits  provide  a
        reasonable basis for our opinion.

        In our  opinion, the financial  statements referred to  above present
        fairly, in all material respects, the financial position of Paramount
        Financial Corporation  and subsidiaries as  of December 31,  1997 and
        1998, and  the results of  their operations and their  cash flows for
        each of the  three years in  the period ended  December 31, 1998,  in
        conformity with generally accepted accounting principles.




                                                          ARTHUR ANDERSEN LLP
        Melville, New York
        March 12, 1999


                                      F-2
     <PAGE>

                   PARAMOUNT FINANCIAL CORPORATION AND SUBSIDIARIES
                   ------------------------------------------------

                             CONSOLIDATED BALANCE SHEETS
                             ----------------------------


                                                         December 31,
                                                   -------------------------
                          ASSETS                        1997         1998
                          ------                        ----         ----

         Cash and cash equivalents                   $2,209,649   $1,495,082
         Investments available for sale               3,524,456      613,188
         Accounts receivable, net                     1,138,479    2,632,258
         Net investment in direct finance and
          sales-type leases                          39,941,764   30,059,378
         Assets held under operating leases, net
          of accumulated depreciation                 5,459,895    7,263,181
         Other assets                                   788,218    3,183,523
                                                     ----------   ----------

                       Total assets                 $53,062,461  $45,246,610
                                                     ==========   ==========

           LIABILITIES AND SHAREHOLDERS' EQUITY
           ------------------------------------

         LIABILITIES:
              Notes payable                          $2,656,365   $4,313,189
              Accounts payable                        1,307,496      942,431
              Accounts payable - leases                 708,568      100,000
              Accrued expenses                          383,097      658,392
              Obligations for financed equipment
              - non-recourse                         40,287,404   33,435,459
              Deferred income taxes                      73,848            -
                                                     ----------   ----------

                    Total liabilities                45,416,778   39,449,471
                                                     ----------   ----------

         COMMITMENTS (Note 14)

         SHAREHOLDERS' EQUITY:
              Preferred stock, $.01 par value;
                   5,000,000 shares authorized,
                   none outstanding                        -            -
              Common stock, $.04 par value;
                   17,500,000 shares
                   authorized, 1,997,500 and
                   2,160,000 shares issued and
                   outstanding, respectively             79,900       86,400
              Additional paid-in capital             13,644,228   14,456,728
              Stock subscription receivable                -        (812,500)
              Accumulated deficit                    (6,049,080)  (7,882,884)
              Treasury stock, 12,500 and 24,500           
              shares, respectively                     (29,365)     (50,605)
                                                    ----------   ----------

                   Total shareholders' equity        7,645,683    5,797,139
                                                    ----------   ----------

                   Total liabilities and
                    shareholders' equity            $53,062,461  $45,246,610
                                                    ===========  ===========

        The accompanying  notes are  an integral  part of  these consolidated
        balance sheets.


                                      F-3
     <PAGE>


                PARAMOUNT FINANCIAL CORPORATION AND SUBSIDIARIES
                ------------------------------------------------

                    CONSOLIDATED STATEMENTS OF OPERATIONS
                    -------------------------------------


                                             Years Ended December 31,
                                      --------------------------------------
                                         1996         1997          1998
                                         ----         ----          ----
         REVENUES:                                      
              Sales and Service       $27,159,894  $21,405,788   $30,391,446
              Lease revenue             3,680,924    9,829,991     7,478,750
              Fee, interest and
               other income               511,698    1,159,062       615,295
                                      -----------  -----------   -----------

                   Total revenues      31,352,516   32,394,841    38,485,491
                                      -----------  -----------   -----------

         COSTS AND EXPENSES:
              Cost of sales            25,785,022   19,933,213    28,157,266
              Lease expense             3,419,600    9,499,365     7,172,273
              Selling, general and
               administrative
               expenses                 2,447,884    3,746,712     4,947,718
              Interest expense              6,209            -        51,324
                                      -----------  -----------   -----------

                   Total costs and
                    expenses           31,658,715   33,179,290    40,328,581
                                      -----------  -----------   -----------

                   Loss before provision
                    for (benefit     
                    from) income
                    taxes                (306,199)    (784,449)   (1,843,090)

              Provision For (Benefit
               From) Income Taxes         498,212     (288,111)       (9,286)
                                      -----------  -----------   -----------
                   Net loss             $(804,411)   $(496,338)  $(1,833,804)
                                      ===========  ===========   ===========

         Basic loss per common share       $(0.41)      $(0.25)       $(0.89)
                                      ===========  ===========   ===========
         Diluted loss per common
          share                            $(0.41)      $(0.25)       $(0.89)
                                      ===========  ===========   ===========

         Shares used in computing
          net loss per share:
              Basic                     1,954,493    1,991,117     2,067,842
                                      ===========  ===========   ===========
              Diluted                   1,954,493    1,991,117     2,067,842
                                      ===========  ===========   ===========



        The accompanying notes are an integral part of these consolidated
        statements.


                                     F-4
     <PAGE>

                   PARAMOUNT FINANCIAL CORPORATION AND SUBSIDIARIES
                   ------------------------------------------------

                   CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY 
                   ------------------------------------------------

                 FOR THE YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
                 ----------------------------------------------------


                                          Common Stock          Additional
                                       ------------------        Paid-In
                                       Shares      Amount        Capital
                                       ------      ------       ----------

      BALANCE, December 31, 1995      3,500,000    $35,000       $5,282,049

      Issuance of common stock in
           the initial public
           offering, net of
           offering costs of
           approximately
           $2,057,921                 2,990,000     29,900        8,377,179
      Issuance of common stock to
           bridge lenders             1,500,000     15,000          (15,000)
      Current year net loss                   -          -                -
                                      ---------    -------      -----------
       
      BALANCE, December 31, 1996      7,990,000     79,900       13,644,228

           Purchase of treasury
            stock                             -          -                -
           Current year net loss              -          -                -
                                      ---------    -------      -----------

      BALANCE, December 31, 1997      7,990,000     79,900       13,644,228

           One-for-four reverse
            stock split              (5,992,500)         -                -
           Issuances of common
            stock                       162,500      6,500          812,500
           Purchase of treasury
            stock                             -          -                -
           Current year net loss              -          -                -
                                      ---------    -------      -----------

      BALANCE, December 31, 1998      2,160,000    $86,400      $14,456,728
                                      =========    =======      ===========



                                    Stock
                                Subscription  Accumulated   Treasury
                                 Receivable     Deficit       Stock       Total
                                 ----------     -------       -----       -----

      BALANCE, 
       December 31, 1995           $     -   $(4,748,331)    $    -    $568,718

      Issuance of common
           stock in the
           initial public
           offering, net of
           offering costs of
           approximately
           $2,057,921                     -            -          -   8,407,079
      Issuance of common
           stock to bridge
           lenders                        -            -          -           -
      Current year net loss               -     (804,411)         -    (804,411)
                                  ---------   ----------    -------   ---------
       
      BALANCE, December 31, 1996          -   (5,552,742)         -   8,171,386

           Purchase of
            treasury stock                -            -    (29,365)    (29,365)
           Current year net
            loss                          -     (496,338)         -    (496,338)
                                  ---------   ----------    -------   ---------

      BALANCE, December 31, 1997          -   (6,049,080)   (29,365)  7,645,683

           One-for-four
            reverse stock
            split                         -            -          -           -
           Issuances of
            common stock           (812,500)           -          -       6,500
           Purchase of
            treasury stock                -            -    (21,240)    (21,240)
           Current year net
            loss                          -   (1,833,804)         -  (1,833,804)
           loss                   ---------  -----------   --------   ---------

      BALANCE, December 31, 1998  $(812,500) $(7,882,884)  $(50,605) $5,797,139
                                  =========  ===========   ========  ========== 
                                  

     The accompanying notes are an integral part of these consolidated
     statements.


                                      F-5
     <PAGE>
           

                PARAMOUNT FINANCIAL CORPORATION AND SUBSIDIARIES
                ------------------------------------------------

                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                    -------------------------------------

                                                 Years Ended December 31,
                                        -------------------------------------
                                             1996        1997         1998
                                             ----        ----         ----

      CASH FLOWS FROM OPERATING
       ACTIVITIES:
           Net loss                    $   (804,411)   $(496,338)  $(1,833,804)
           Adjustments to reconcile
            net loss to net cash
            provided by operating
            activities:
            Deferred income taxes           425,662     (351,814)      (73,848)
            Depreciation and
             amortization                 2,037,472    6,721,854     5,558,520
            Amortization of
             discounts on
             investments                   (162,296)    (205,082)     (26,953)
            Amortization of
             unearned operating
             lease revenue from
             sublease transactions          (19,928)           -             -
            Amortization of prepaid
             operating lease expense
             from sublease transactions      25,067            -             -
            Changes in operating assets
             and liabilities:
                Accounts receivable      (2,153,219)   1,121,534    (1,493,779)
                Other assets                279,659     (396,901)   (1,556,671)
                Accounts payable            642,602      245,270      (365,065)
                Accrued expenses           (105,576)     194,928       275,295
                                         ----------  -----------   -----------
      Net cash provided by operating
       activities                           165,032    6,833,451       483,695
                                         ----------  -----------   -----------

      CASH FLOWS FROM INVESTING
       ACTIVITIES:
           Accounts payable - leases     18,107,528  (17,525,950)     (608,568)
           Purchase of equipment
            for direct finance
            leases and sales-type
            leases                      (21,773,460) (38,158,975)  (11,787,818)
           Termination of direct
            finance leases                1,591,822    4,499,046     3,159,587
           Proceeds applied to
            direct finance leases
            and sales-type leases         5,685,159   12,327,521    18,159,432
           Purchase of equipment
            for operating leases        (31,913,845)    (346,733)   (8,178,032)
           Termination of operating
            leases                       12,749,549    6,972,505       481,980
           Residual value sharing
            arrangements                          -    4,628,698       856,969
           Payments for acquisitions,
            net of cash acquired                  -            -    (1,010,172)
           Purchases of investments     (19,495,594) (14,187,250)   (3,697,782)
           Proceeds from sale/maturity
            of investments               16,494,049   14,031,717     6,636,003
                                         ----------  -----------   -----------
      Net cash (used in) provided
       by investing activities          (18,554,792) (27,759,421)    4,011,599
                                         ----------  -----------   -----------

      CASH FLOWS FROM FINANCING
      ACTIVITIES:
           Proceeds from sale of
            common stock                  8,407,079            -         6,500
           Repurchase of common stock             -      (29,365)      (21,240)
           Proceeds from notes payable            -    3,894,286     5,183,606
           Repayment of notes payable    (1,593,313)  (1,256,305)   (3,526,782)
           Increase in non-recourse
            lease financing              31,559,769   38,818,439    19,139,928
           Termination of non-recourse
            lease financing              (9,978,194)  (3,463,973)   (2,864,077)
           Repayments and interest
            amortization applied to
            non-recourse lease
            financing                    (7,458,283) (18,528,237)  (23,127,796)
                                         ----------  -----------   -----------
      Net cash provided by (used in)
       financing activities              20,937,058   19,434,845    (5,209,861)
                                         ----------  -----------   -----------
      Net increase (decrease) in cash
       and cash equivalents               2,547,298   (1,491,125)     (714,567)

      CASH AND CASH EQUIVALENTS,
       beginning of period                1,153,476    3,700,774     2,209,649
                                         ----------  -----------    ----------
      CASH AND CASH EQUIVALENTS,
       end of period                     $3,700,774   $2,209,649    $1,495,082
                                         ==========   ==========    ==========

      SUPPLEMENTAL CASH FLOW
       INFORMATION:
        Cash paid for income taxes       $   24,437   $   48,574    $   87,232
                                         ==========   ==========    ==========
        Cash paid for interest           $1,358,538   $2,936,823    $2,714,790
                                         ==========   ==========    ==========

      DETAILS OF ACQUISITIONS:
        Fair value of assets acquired    $        -    $       -    $2,365,376
        Liabilities assumed                       -            -    (2,570,194)
        Notes issued                              -            -      (262,500)
        Purchase price in excess
          of net assets acquired                  -                  1,477,490
                                         ----------    ---------   -----------
        Cash paid for acquisitions       $        -    $       -   $ 1,010,172
                                         ==========    =========   ===========

     The accompanying notes are an integral part of these consolidated
     statements.


                                      F-6
     <PAGE>


                   PARAMOUNT FINANCIAL CORPORATION AND SUBSIDIARIES
                   ------------------------------------------------

                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      ------------------------------------------

          1.   COMPANY BACKGROUND:
               ------------------

          Paramount Financial Corporation ("Paramount" or the "Company")
          was incorporated in the state of Delaware in July 1991. 
          Paramount is a comprehensive business solutions provider,
          offering customers a wide range of integrated services including
          lease finance, network design and implementation.  The Company is
          not tied to any one manufacturer and thus can provide customers
          with available technical and financial alternatives regardless of
          the specific hardware platform.  Paramount's customer base is
          mostly comprised of large, domestic, creditworthy customers in a
          variety of industries.  Prior to 1996, the Company generated most
          of its revenue from wholesale trading of new and used equipment. 
          However, in 1996, the Company aggressively expanded its leasing
          operations, which now accounts for most of its revenue.  In July
          1996, Paramount formed a new wholly owned subsidiary, Paratech
          Resources Inc. ("Paratech"), which offers comprehensive
          information technology solutions, including network design and
          integration, software applications, training and value added
          support services.  In January 1998, the Company acquired
          Deltaforce Personnel Services, Inc. ("Deltaforce"), which offers
          temporary and permanent legal support staff. 

          On January 22, 1996 ("Effective Date"), the Company consummated
          an initial public offering of its securities.  In connection with
          the offering, the Company issued a total of 1,495,000 units
          inclusive of the underwriter's over-allotment option which was
          exercised in full, at a price of $7.00 per unit.  Each unit sold
          in the offering consisted of two shares of common stock and two
          redeemable class A warrants.  The common stock and class A
          warrants were detachable and trade separately.  The class A
          warrants are exercisable commencing one year from the Effective
          Date.  Each class A warrant entitles the holder to purchase one
          share of common stock at $16.00 per share (after giving effect to
          a one-for-four reverse stock split of the common stock effected
          May 19, 1998 (see Note 9) and subject to adjustment for anti-
          dilution) during the four year period commencing one year from
          the Effective Date.  The class A warrants are redeemable by the
          Company for $0.05 per warrant, in the event that the closing bid
          price of the Company's common stock exceeds $36.00 per share
          (after giving effect to the one-for-four reverse stock split) for
          twenty consecutive trading days ending within ten days of the
          notice of redemption. With the prior written consent of the
          underwriter, upon thirty days written notice to all holders of
          the class A warrants, the Company shall have the right to reduce
          the exercise price and/or extend the term of the class A
          warrants.  None of the class A warrants issued in connection with
          the initial public offering have been exercised to date.  Net
          proceeds of the offering totaled approximately $8,400,000, after
          deducting underwriting discount and commissions, underwriter's
          non-accountable expense allowance and other offering expenses. 

          In connection with the offering, 300,000 shares of common stock
          owned by the Company's two original shareholders (the "Selling
          Securityholders") were also offered and sold to the public. 
          Additionally, there was a secondary offering of securities by
          certain non-affiliated lenders of the Company (the "Selling
          Lenders").  The Selling Lenders registered 750,000 units,
          identical to the initial public offering units described above,
          as well as an additional 1,500,000 shares of common stock
          issuable upon the exercise of class B warrants (Note 8).  The
          class B warrants are identical to class A warrants, except that
          their exercise price is $16.80 per share (after giving effect to


                                      F-7
     <PAGE>

          the one-for-four reverse stock split), they are not included for
          listing on any public trading market and there is no solicitation
          fee payable in connection with their exercise.  None of the
          aforementioned class A or class B warrants have been exercised to
          date.


          2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
               ------------------------------------------

          Principles of Consolidation
          ---------------------------

          The consolidated financial statements as of and for the years
          ended December 31, 1996 and 1997 includes the accounts of the
          Company and its wholly owned subsidiary, Paratech Resources Inc. 
          The consolidated financial statements as of and for the year
          ended December 31, 1998 includes the accounts of the Company and
          its wholly owned subsidiaries, Paratech Resources Inc. and
          Deltaforce Personnel Services, Inc.  All intercompany balances
          and transaction have been eliminated in consolidation.

          Cash Equivalents
          ----------------

          The Company considers all highly liquid debt and equity
          instruments with an original maturity of three months or less to
          be cash equivalents.  Cash equivalents include investments in
          money market funds and are stated at cost, which approximates
          market value.

          Investments Available for Sale
          ------------------------------

          Statement of Financial Accounting Standards No. 115 ("SFAS 115"),
          "Accounting for Certain Investments in Debt and Equity
          Securities" addresses the accounting and reporting for
          investments in debt and equity securities.  Securities classified
          as available for sale are reported at fair value, with unrealized
          gains and losses excluded from earnings and reported as a
          separate component of stockholders' equity (on an after tax
          basis).  Gains and losses on the disposition of securities are
          recognized on the specific identification method in the period in
          which they occur.  

          At December 31, 1997 and 1998, investments available for sale
          consist of United States government and agency bonds with
          original maturities of one year or less and a mutual fund. The
          cost of debt securities is adjusted for accretion of discount to
          maturity and recorded as interest income and interest income is
          recorded on the mutual fund as earned. At December 31, 1997 and
          1998, the cost basis of these securities approximates market
          value.

          Net Investment in Direct Finance and Sales-Type Leases
          ------------------------------------------------------

          The net investment in direct finance and sales-type leased assets
          consists of the present value of the future minimum lease
          payments plus the present value of the residual value, if any
          (collectively referred to as the "net investment").  The residual
          value is the estimated fair market value of the leased assets at
          lease expiration.  

          Completed lease contracts which qualify as direct finance and
          sales-type leases, as defined by Statement of Financial
          Accounting Standards No. 13, ("SFAS 13") "Accounting for Leases",
          are accounted for on the balance sheet by recording the total
          minimum lease payments receivable, the estimated residual value


                                      F-8
     <PAGE>

          of the leased equipment and the unearned income.  The unearned
          lease income represents the excess of the total minimum lease
          payments and the estimated residual value expected to be
          realized, over the cost of the related equipment.  The unearned
          income is recognized as revenue over the term of each lease by
          applying a constant periodic rate of return to the declining net
          investment in each lease.

          Lease revenue includes that portion of unearned income amortized
          into income during the current period.  Revenue recognized at the
          inception of a sales-type lease is recorded in sales.


          Assets Held Under Operating Leases
          ----------------------------------

          Assets held under operating leases consist of the equipment at
          cost, net of accumulated depreciation.  Depreciation is
          recognized on a straight-line basis over the lease term up to the
          Company's estimate of the equipment's residual value at lease
          expiration.  Accumulated depreciation was approximately
          $5,148,000 and $4,453,000 at December 31, 1997 and 1998,
          respectively.

          Lease revenue includes the contractual lease payments and is
          recognized on a straight-line basis over the lease term.

          Residual Values
          ---------------

          The Company's residual value estimates are based on current
          market conditions and published residual value projections, as
          determined at lease inception.  On an ongoing basis, the Company
          compares its residual value estimates against currently published
          independent forecasts of equipment values at lease expiration as
          well as other known market conditions.  If the residual value is
          determined to be excessive and the decline in residual value is
          judged to be other than temporary, the Company revises its
          residual values accordingly with corresponding adjustments to
          income and unearned income.  During the years ended December 31,
          1997 and 1998, the Company entered into residual value sharing
          agreements whereby an equipment investor or a financial
          institution purchased a portion of the residual value of the
          equipment on lease in exchange for the right to share in re-
          marketing proceeds received upon lease expiration.  The proceeds
          received were used to reduce the cost basis and the residual
          value in the leased assets.

          Use of Estimates
          ----------------

          The preparation of financial statements in conformity with
          generally accepted accounting principles requires management to
          make estimates and assumptions that affect the reported amounts
          of assets and liabilities at the date of the financial statements
          and the reported amounts of revenues and expenses during the
          reporting period.  Actual results could differ from those
          estimates.

          Revenue Recognition
          -------------------

          The Company records revenues when products are shipped and title
          transfers to the customers or services are provided to customers. 
          When equipment is sold to another computer leasing and trading
          company (a "broker"), the transfer of title and recognition of
          revenue generally occur upon the receipt of payment from the
          broker.


                                      F-9
     <PAGE>

          From time to time, the Company will receive payment prior to the
          transfer of title or purchase of the related inventory.  The
          Company records such amounts as unearned sales revenue on the
          balance sheet.  Upon shipment and transfer of title, unearned
          sales revenue is reversed and recorded as equipment sales. 

          The Company records revenue from the sale of leased equipment to
          an equipment investor upon transfer of title to the equipment. 
          Subsequent to a sale of this variety, the Company generally is a
          party to a re-marketing agreement under which it may earn
          additional income from the asset's future re-lease or sale value
          upon lease termination or expiration.

          See Net Investment in Direct Finance and Sales-Type Leases and
          Assets Held Under Operating Leases for a discussion of revenues
          earned under leasing transactions.

          Sublease Transactions
          ---------------------

          From time to time, the Company enters into certain transactions
          in which it acts as both lessee and sublessor of equipment. 
          Since both the lease and sublease are operating leases, no
          related assets or liabilities are recorded on the Company's
          balance sheet, other than transactions that are prepaid.  

          Lease Expense
          -------------

          Lease expense includes depreciation on assets held under
          operating leases, interest expense on obligations for financed
          equipment and sublease rental expense.  The cost of equipment
          recognized at the inception of a sales-type lease is reflected in
          cost of sales.

          Income Taxes
          ------------

          At its inception, the Company elected status as an S corporation
          and, therefore, through December 31, 1995 was not subject to
          federal income tax as a separate entity.  Instead, the
          shareholders were taxed on the Company's income, whether or not
          distributed, and they were entitled to deduct Company losses, if
          any, to the extent of the tax basis each shareholder had in the
          Company's common stock.  The Company had been subject to certain
          corporate taxes on the state level.  In connection with its
          initial public offering described above, the Company terminated
          its S election and is currently taxable as a C corporation.  The
          adjustment to record deferred income taxes upon termination of
          the Company's S election was to record a net deferred income tax
          liability of approximately $430,000 in 1996.

          Deferred income taxes are provided for temporary differences
          between the carrying values of assets and liabilities for
          financial reporting and tax purposes at the enacted rate at which
          these differences are expected to reverse in accordance with
          Statement of Financial Accounting Standards No. 109, "Accounting
          for Income Taxes". 

          Net Loss Per Common Share
          -------------------------

          Effective December 31, 1997, the Company adopted the disclosure-
          only Statement of Financial Accounting Standards No. 128 ("SFAS
          128") "Earnings per Share".  In accordance with SFAS 128, basic
          loss per common share is computed by dividing net loss by the


                                      F-10
     <PAGE>

          weighted average number of common shares outstanding. Common
          stock equivalents are excluded from the computation as they would
          have an anti-dilutive effect.

          Stock-Based Compensation
          ------------------------

          In 1996, the Company adopted the disclosure-only provisions of
          Statement of Financial Accounting Standards No. 123 ("SFAS 123"),
          "Accounting for Stock-Based Compensation", by continuing to apply
          the provisions of Accounting Principles Board ("APB") Opinion No.
          25, "Accounting for Stock Issued to Employees," while providing
          the required pro forma disclosures as if the fair value method
          had been applied (Note 10).

          Reclassifications
          -----------------

          Certain prior year amounts have been reclassified to conform with
          the current year presentation.


          3.   ACQUISITIONS
               ------------

          Deltaforce Personnel Services, Inc.
          -----------------------------------

          On January 9, 1998, the Company acquired 100% of the outstanding
          shares of Deltaforce Personnel Services, Inc. ("Deltaforce"), a
          privately held New York City-based staffing company, for
          approximately $560,000, which included $162,500 of notes payable.
          The acquisition agreement provides for additional consideration
          of $162,500 to be paid if the acquired entity's results of
          operations exceed certain targeted levels. This additional
          consideration will be recorded when earned as additional purchase
          price. The acquisition was accounted for as a purchase and
          accordingly the operating results of Deltaforce have been
          included in the Company's consolidated financial statements since
          the date of the acquisition.  The excess of the aggregate
          purchase price over the net assets acquired of approximately
          $463,500 is being amortized over 15 years.  

          RBW Staffing Resources, Inc.
          ----------------------------

          On July 28, 1998, Deltaforce, a wholly owned subsidiary of the
          Company, acquired certain assets from RBW Staffing Resources,
          Inc. (d/b/a WordSmiths) ("WordSmiths"), a privately held New York
          City based staffing company, for approximately $440,000, which
          included $100,000 of notes payable.  The acquisition was
          accounted for as a purchase and accordingly the operating results
          of WordSmiths have been included in the Company's consolidated
          financial statements since the date of the acquisition.  The
          excess of the aggregate purchase price over the net assets
          acquired, of approximately $440,000, is being amortized over 15
          years.  In connection with this acquisition, Deltaforce entered
          into non-compete agreements with two key executives of WordSmiths
          for an aggregate consideration of $460,000, $60,000 of which was
          paid at closing with $150,000 due on July 28, 1999 and $250,000
          due on July 28, 2000.  Such non-compete agreements are included
          in other assets and are being amortized over the term of the
          agreement of 5 years.  In addition, simultaneous with the closing
          of the transaction, the Company entered into an employment
          agreement with the former shareholder of WordSmiths (the
          "Shareholder").  Under the terms of this agreement, the Company
          sold 162,500 shares of newly issued $.04 par value common stock
          to the Shareholder as follows: (1) 81,250 shares at $4.00 per
          share, and (2) 81,250 shares at $6.00 per share.  The Shareholder


                                      F-11
     <PAGE>

          paid for the stock with cash equal to the par value of the shares
          issued ($6,500) and by the issuance of two non-recourse secured
          promissory notes and stock pledge agreements restricting the
          issuance of the stock until the notes are paid in full.  The
          notes mature on July 27, 2000 and July 27, 2001, respectively
          (Note 7).  The operations of WordSmiths were merged into
          Deltaforce to create The DeltaGroup.

          Abbey, Garrett and Seth, Ltd.
          -----------------------------

          On October 23, 1998, Paratech Resources, Inc., a wholly owned
          subsidiary of the Company,  acquired 100% of the outstanding
          shares of Abbey, Garrett and Seth, Ltd. (d/b/a: Comptech
          Resources) ("Comptech"), a privately held systems consulting,
          software applications and Internet commerce development firm, for
          approximately $272,000. The acquisition was accounted for as a
          purchase and accordingly the operating results of Comptech have
          been included in the Company's consolidated financial statements
          since the date of the acquisition.  The excess of the aggregate
          purchase price over the net assets acquired of approximately
          $574,000 is being amortized over 10 years. In connection with
          this acquisition, the Company entered into non-compete agreements
          with three key executives for an aggregate consideration of
          $380,000, $105,000 of which was paid at closing with $25,000 due
          quarterly through October 23, 2001. 


          4.   DIRECT FINANCE AND SALES-TYPE LEASES:
               ------------------------------------

          The net investment in direct finance and sales-type leases at
          December 31, 1997 and 1998 was comprised of the following:


                                                     1997          1998
                                                     ----          ----

           Total minimum lease payments
           receivable                            $39,434,601   $30,895,900
           Estimated residual value of
           equipment                               3,777,595     1,727,787
                                                  ----------    ----------
                                                  43,212,196    32,623,687


           Less: unearned income                   3,270,432     2,564,309
                                                  ----------    ----------
           Net investment in direct finance
           and sales-type leases                  $39,941,764   $30,059,378
                                                  ===========   ===========


          5.   FUTURE MINIMUM LEASE PAYMENTS:
               -----------------------------

          Future minimum lease rentals to be received by the Company under
          non-cancelable direct finance, sales-type and operating leases
          expiring through 2003 are as follows:

          Years Ending              Direct Finance and    Operating
          December 31,              Sales-Type Leases      Leases
          ------------              -----------------    ----------

           1999                         $24,351,494      $4,247,253
           2000                          12,736,497       1,123,815
           2001                           4,942,645         447,032
           2002                             857,975               - 
           2003                             451,393               -


                                      F-12
     <PAGE>



          6.   OBLIGATIONS FOR FINANCED EQUIPMENT - NON-RECOURSE:
               -------------------------------------------------

          Under various arrangements with banks and financial institutions,
          the Company finances substantially all of its equipment leases
          with non-recourse notes.  These notes provide for an assignment
          of future lease rentals to these institutions at fixed interest
          rates (which range between 6.0% and 10.8%).  In exchange for
          these future rentals, the Company receives a discounted cash
          payment.  In the event of default by a lessee, the financial
          institution has a first lien on the underlying equipment, with no
          further recourse against the Company.  The underlying equipment
          securing these non-recourse notes represents the Company's assets
          under direct finance, sales-type and operating leases, which book
          value totalled approximately $45.3 million and $37.3 million at
          December 31, 1997 and 1998, respectively.

          Future maturities through 2003 on the non-recourse notes
          described above are as follows:

                  Years Ending December 31,         Lease Payments
                  -------------------------         --------------

                  1999                                $19,631,397
                  2000                                  9,632,886
                  2001                                  5,034,509
                  2002                                    866,600
                  2003                                    452,918
                                                      -----------
                                                       35,618,310
                  Less: Interest                        2,182,851
                                                      $33,435,459
                                                      ===========


          7.   NOTES PAYABLE AND OTHER FINANCING:
               ---------------------------------

          Notes payable were comprised of the following at December 31,
          1997 and 1998:

                                                   1997         1998
                                                   ----         ----

          Notes payable to financial
          institutions (a)                     $2,324,611   $1,601,990
          Credit facilities (b)                   331,754    1,773,699
          Notes payable related to
          acquisitions (c)                           -         937,500
                                               ----------   ----------
                                               $2,656,365   $4,313,189
                                               ==========   ==========

          (a)  During 1997 and 1998, the Company entered into a total of
               nine notes payable agreements totalling approximately
               $2,925,000 with a financial institution to finance the
               residual value of certain equipment on lease, at an interest
               rate of prime (8.50% at December 31, 1998) plus 0.25%. 
               Interest is payable quarterly and the principal amount is
               due 60 days after lease expiration.  These notes mature
               through the year 2001.  The equipment on lease and the
               related lease serve as collateral for the notes payable.


                                     F-13
     <PAGE>

               Also in 1997, the Company entered into a similar arrangement
               with the same institution for $238,056 of residual value
               financing bearing interest at prime (8.50% at December 31,
               1998) plus 0.50% payable semi-annually.  The entire
               principal amount is due 60 days after lease expiration
               (November 30, 1999). The equipment on lease and the related
               lease serve as collateral for this note payable.

               The Company entered into similar notes payable in the amount
               of $1,254,000 and $18,036 with the same institution in early
               1997 and 1998, and repaid the loans in the same year.

          (b)  In December 1997, the Company entered into a loan agreement
               with a bank for a $2,000,000 credit facility, which expires
               on December 30, 1998, to finance the purchase of equipment
               on leases that are approved by the bank.  The bank will
               issue notes equal to the discounted rental payments under
               the leases being financed using the bank's current interest
               rate.  The notes are payable monthly as the lease payments
               become due.  As collateral for the notes, the bank has a
               first priority security interest in the equipment and the
               underlying lease.  Under the agreement the Company is
               required to maintain certain financial ratios.  As of
               December 31, 1998, the Company was not in compliance with
               the debt covenant requiring tangible net worth of at least
               $6.7 million.  As of December 31, 1998, the Company had
               $106,000 outstanding at a rate of 8.08%.  Annual maturities
               are $87,000 and $19,000 in 1999 and 2000, respectively.

               The Company maintains a $2,000,000 revolving line of credit
               agreement with a finance company, for it's subsidiary
               Paratech, secured by accounts receivable of Paratech.
               Interest on outstanding borrowings accrues at the prime rate
               (8.50% at December 31, 1998) plus 1 1/2%. Borrowings are
               limited to 85% of eligible accounts receivable. This
               facility allows the Company to purchase computer hardware
               from its vendors with net 30-day terms interest free.  At
               the expiration of the net 30-day period, the Company has the
               option of paying the amount due or, provided the Company has
               sufficient eligible collateral, borrowing under the credit
               facility.  As of December 31, 1998, Paratech had $464,000
               outstanding under this line, of which $194,000 was
               classified as debt.  

               In addition, in connection with the acquisition of Comptech,
               the Company assumed all outstanding obligations under a
               similar arrangement between Comptech and the same finance
               company.  As of December 31, 1998, approximately $440,000
               remained outstanding under this facility.  This facility
               must be repaid in full by July 23, 1999.  

               In April 1998, the Company entered into a $500,000 term loan
               with a bank collateralized by $600,000 in cash maintained in
               an investment account.  Interest accrues at a rate of 8.03%
               and principal payments of approximately $41,600 and interest
               are due on a quarterly basis through April 20, 2001.  As of
               December 31, 1998, approximately $417,000 remains
               outstanding under this agreement.

               In January 1998, the Company entered into a $750,000
               revolving line of credit agreement with a bank secured by
               accounts receivable which expires on June 30, 1999. 
               Interest on outstanding borrowings accrues at the bank's
               prime rate (8.50% at December 31, 1998) plus 1%, and
               interest is paid monthly.  Borrowings are limited to 80% of
               eligible accounts receivable.  As of December 31, 1998,
               $600,000 was outstanding under this line.


                                     F-14
     <PAGE>


     


          (c)  In connection with the acquisitions described in Note 3, the
               Company entered into promissory notes with several
               individuals.  Interest on such notes ranges from 0% to
               8.50%.  The interest components of those non-interest
               bearing notes are immaterial.  Annual maturities are
               $512,500, $350,000 and $75,000 in 1999, 2000 and 2001,
               respectively.


          Additional Financing
          --------------------

          During 1997, the Company entered into several residual value
          sharing agreements whereby a financial institution agreed to
          purchase a portion of the residual values of the equipment on
          lease for approximately $4,629,000 in exchange for the right to
          share in re-marketing proceeds received upon lease expiration. 
          The proceeds received were used to reduce the Company's cost
          basis and residual value in the leased assets. 


          Secured Bridge Line
          -------------------

          This facility has been arranged with three banks in the total
          amount of $1,250,000, for the purpose of financing the cost of
          equipment purchased for sale or lease, on a short-term basis,
          generally payable in 30 to 90 days.  The lending banks are given
          a first security interest in both the equipment and the contract
          for sale or lease. The above secured line also includes a
          $100,000 unsecured working capital line.  The interest rate
          charged for these borrowings is a floating 1% over the banks'
          prime lending rate, 8.5% and 9% at December 31, 1997 and 1998,
          respectively.   As of December 31, 1997 and 1998, no amounts were
          outstanding under these facilities.  Both lines expired on June
          30, 1998.


          8.   INCOME TAXES:
               ------------

          The provision for (benefit from) income taxes is comprised of the
          following:

                                             Years Ended December 31,
                                           -----------------------------
                                             1996      1997       1998
                                             ----      ----       ----
             Current:
                  Federal                  $    -    $     -    $    -
                  State                     72,550     63,703    43,328
                                           -------   --------  --------
                                            72,550     63,703    43,328
                                           -------   --------  --------
                                           
             Deferred:
                  Federal                  (82,583)  (251,928) (532,055)
                  State                    (12,145)   (99,886)  (82,362)
                                           -------   --------  --------
                                           (94,728)  (351,814) (614,417)
                                           -------   --------  --------
             Valuation allowance            90,000       -      561,803
                                           -------   --------  --------
             Termination of Subchapter
             "S" election                  430,390       -         -
                                           -------   --------  --------
                                          $498,212  $(288,111) $ (9,286)
                            Total          =======   ========   =======


                                      F-15
     <PAGE>

          Significant components of deferred income tax assets and
          (liabilities) are as follows: 


                                                 1997         1998
                                                 ----         ----

           Depreciation                       $263,757      $655,323
           Lease transactions treated
                differently for tax and
                financial reporting purposes  (803,095)     (726,226)
           Net operating loss carryforward     471,698       600,320
           Other                                83,792       122,386
           Valuation allowance                 (90,000)     (651,803)
                                               -------      --------

           Net deferred income tax
           (liability)                       $ (73,848)     $   -
                                             =========      ========


          The following reconciliation presents the principal reasons for
          the difference between income taxes calculated at the United
          States federal statutory income tax rate (34%) and the provision
          for (benefit from) income taxes:


                                              Years Ended December 31,
                                        ------------------------------------
                                            1996        1997        1998
                                            ----        ----        ----

           Federal income tax benefit
            at U.S. statutory rate      $(104,108)  $(266,713)  $(626,651)
           Subchapter "C" impact of
            SFAS 109                      430,390        -            -   
           Change in valuation
            allowance                      90,000        -        561,803
           State taxes, net of federal
            benefit                        36,583      39,547      43,328
           All other, net                  45,347     (60,945)     12,234
                                         --------   ---------     -------

           Provision for (benefit
            from) income taxes           $498,212   $(288,111)   $ (9,286)
                                         ========   =========     =======

          The Company has net operating loss carryforwards for income tax
          reporting purposes of approximately $1,539,000 expiring through
          2013.  A full valuation allowance has been provided against the
          net deferred tax asset due to the uncertainty at December 31,
          1998 as to their future realization.


          9.   SHAREHOLDERS' EQUITY:
               --------------------

          In connection with the recapitalization of the Company in
          contemplation of its initial public offering, in August 1995, the
          Company's Board of Directors approved a stock split of
          approximately 33,018.86792-to-one, in the form of a stock
          dividend to the Company's common shareholders.  Par value changed
          to $0.01 per share from $1.00 per share.  The stock dividend
          resulted in the issuance of 3,499,894 additional shares of common
          stock, for a total of 3,500,000 shares outstanding subsequent to
          the split.  This action required an amendment to the Company's
          Articles of Incorporation, which increased the number of
          authorized shares of common stock from 1,000 to 35,000,000 and


                                      F-16
     <PAGE>

          authorized 5,000,000 shares of preferred stock.  Effective May
          19, 1998, the Board of Directors approved a reduction of the
          authorized number of shares of common stock from 35,000,000 to
          17,500,000 and authorized a one-for-four reverse stock split of
          the Company's common stock.  The par value of the common stock
          was increased from $0.01 to $0.04 per share.  The preferred stock
          remained unchanged.  All shareholders' equity accounts and per
          share data have been retroactively adjusted to reflect this
          reverse split.

          See Note 1 for a description of the Company's initial public
          offering of its securities.

          During the year ended December 31, 1997, the Board of Directors
          of the Company approved a plan that would allow for the
          repurchase of up to $500,000 worth of common stock of the
          Company.  The repurchase program took effect immediately and is
          authorized to continue for a period of two years.  Subject to
          applicable rules, the plan allows the Company to repurchase
          shares at any time during the authorized period in any increments
          it deems appropriate.  As of December 31, 1997 and 1998, the
          Company had repurchased 12,500 and 24,500 shares for a cash
          purchase price of $29,365 and $21,240, respectively.


          10.  STOCK OPTION PLANS: 
               ------------------

          Employee Stock Option Plan
          --------------------------

          On August 28, 1995, the Board of Directors adopted and the
          Company's shareholders approved the Employee Stock Option Plan
          (the "Stock Option Plan")  for all senior executive officers, key
          employees and consultants of the Company pursuant to which
          187,500 shares of common stock were reserved for issuance.  In
          June 1997, the Board of Directors approved an amendment to
          increase the aggregate number of shares of common stock reserved
          for issuance by 187,500 shares, for a total of 375,000.  Options
          granted under the Stock Option Plan may be either incentive stock
          options ("ISO's"), which are intended to meet the requirements of
          Section 422 of the Internal Revenue Code of 1986, as amended, or
          non-qualified stock options ("NSO's").  Under the Stock Option
          Plan, the Board of Directors may grant (i) ISO's at an exercise
          price per share which is not less than the fair market value of a
          share of common stock on the date on which such ISO's are granted
          (and not less than 110% of the fair market value in the case of
          any optionee who beneficially owns more than 10% of the total
          combined voting power of the Company), and (ii) NSO's at an
          exercise price per share which is determined by the Board of
          Directors (and which may be less than the fair market value of a
          share of common stock on the date on which such NSO's are
          granted).  The Stock Option Plan further provides that the
          maximum period in which options may be exercised will be
          determined by the Board of Directors, except that ISO's may not
          be exercised after the expiration of ten years from the date the
          ISO was initially granted (and five years in the case of any
          optionee who beneficially owns more than 10% of the total
          combined voting power of the Company).  Any option granted under
          the Stock Option Plan will be nontransferable and may be
          exercised upon payment of the option price in cash, a cash
          equivalent, common stock or any other form of consideration which
          is acceptable to the Board of Directors. 

          Of the total options granted, 21,250 options in 1997 and 0
          options in 1998 are exercisable after one year and the remaining
          20,000 and 144,750 options are exercisable in whole or in part
          20% per year from the date of grant, respectively.  As of
          December 31, 1998, none of the options were exercisable.

                                      F-17
      <PAGE>


          The following table reflects activity under the Stock Option Plan
          for the years ended December 31, 1997 and 1998 :

                                                             Weighted
                                                             Average
                                                             Exercise
                                  Shares    Exercise Price    Price
                                  ------       -------       --------
           Outstanding,
           December 31, 1996         -            -           $  -
           Granted                52,500    $0.59 - $2.38        1.81
           Canceled              (11,250)    0.59 -  1.76        1.11
                                 -------    

           Outstanding,
           December 31, 1997      41,250     1.50 - 2.38         2.00
                                 -------
             Granted             150,000     0.44 - 2.50         1.02
             Canceled             (5,250)    0.44 - 1.50          .99
                                 -------     

           Outstanding,          186,000    $0.44 - $2.38       $1.24
           December 31, 1998     =======    


          The 186,000 options outstanding as of December 31, 1998 have a
          weighted average remaining contractual life of 9.25 years.

          The Company accounts for these plans under APB Opinion No. 25,
          under which no compensation has been recorded.  Had compensation
          cost for the plan been determined in accordance with SFAS 123,
          the Company's net loss and basic loss per common share would have
          been decreased to the following pro forma amounts: 

                                               1997           1998
                                               ----           ----

           Net Loss          As Reported      $496,338     $1,833,804
                             Pro Forma         518,148      1,849,110

           Basic loss per    As Reported             $.25        $.89
           common share      Pro Forma               $.26        $.89
           
          The fair value of each stock option grant is estimated as of the
          date of grant using the Black-Scholes option pricing model with
          the following weighted average assumptions:

                                          1997           1998
                                          ----           ----
           Fair value                    $0.25          $0.59
           Expected life (years)          3.45           3.87
           Risk-free interest rate         6.5%           4.8%
           Volatility                       71%            73%
           Dividend yield                    0%             0%

          The pro forma effects of applying SFAS 123 are not indicative of
          future amounts because stock option awards are anticipated in
          future years.

                                      F-18
      <PAGE>


          Director Option Plan
          --------------------

          On October 1, 1995, the Board of Directors of the Company
          adopted, and the Company's shareholders approved, the Director
          Option Plan (the "Director Plan") pursuant to which 12,500 shares
          of common stock of the Company were reserved for issuance upon
          the exercise of options granted to non-employee directors of the
          Company.  Under the Director Plan, an eligible director of the
          Company will, after having served as a director for one year,
          automatically receive non-qualified stock options to purchase 500
          shares of common stock per annum at an exercise price equal to
          the fair market value of such shares at the time of grant of such
          options.  Each option is immediately exercisable for a period of
          ten years from the date of grant but generally may not be
          exercised more than 90 days after the date an optionee ceases to
          serve as a director of the Company.  The Company has adopted SFAS
          123 to account for stock-based compensation awards granted to
          non-employee directors, under which a compensation cost is
          recognized for the fair value of the options granted as of the
          date of grant.  As of December 31, 1998, there were no options
          granted to directors under the Director Plan.


          11.  EMPLOYEE SAVINGS PLAN
               ---------------------

          The Company has an employee savings plan which covers all
          employees who have completed at least one year of service with
          the Company and permits participants to make contributions by
          salary reduction pursuant to section 401(k) of the Internal
          Revenue Code.  Company contributions are discretionary.  As of
          December 31, 1997 and 1998, the Company did not make any
          contributions to the plan.


          12.  SEGMENT INFORMATION
               -------------------

          Effective December 31, 1998, the Company adopted SFAS No. 131,
          "Disclosures about Segments of an Enterprise and Related
          Information".  Reportable operating segments are determined based
          upon the Company's management approach.  The management approach,
          as defined by SFAS No. 131, is based on the way that the chief
          operating decision maker organizes the segments within an
          enterprise for making operating decisions and assessing
          performance.  While the Company's results of operations are
          primarily reviewed on a consolidated basis, the chief operating
          decision maker also manages the enterprise in three segments: (i)
          high technology equipment leasing ("Paramount"), (ii) business
          integration ("Paratech"), and (iii) legal support staff
          ("DeltaGroup").  The following represents selected financial
          information for the Company's segments for the years ended
          December 31, 1996, 1997 and 1998:

                                      F-19
      <PAGE>

                           Paramount    Paratech    DeltaGroup       Total
                           ---------    --------    ----------       -----
        1996
        ----
        Revenues         $31,195,984    $156,532    $        -   $31,352,516
        Cost of sales     25,643,426     141,596             -    25,785,022
        Net loss            (783,271)    (21,140)            -      (804,411)
        Assets            51,181,503     380,017             -    51,561,520


        1997
        ----
        Revenues          28,620,168   3,774,673             -    32,394,841
        Cost of Sales     16,871,078   3,062,135                  19,933,213
        Net income
        (loss)               231,251    (727,589)            -      (496,338)
        Assets            51,956,164   1,106,297             -    53,062,461

        1998                                                         Total
        ----                                                         -----
        Revenues          29,090,851   5,411,945     3,982,695    38,485,491
        Cost of sales     20,536,854   4,453,016     3,167,396    28,157,266
        Net loss            (784,797)   (545,290)     (503,717)   (1,833,804)
        Assets            40,559,376   2,581,710     2,105,524    45,246,610


          13.  SIGNIFICANT CUSTOMERS AND CONCENTRATION OF CREDIT:
               -------------------------------------------------

          For the years ended December 31, 1996, 1997 and 1998, the
          following customers represented in excess of 10% of total
          revenues for the respective years:

                      Customer     1996       1997       1998
                      --------     ----       ----       ----

                         A         40%          -          -
                         B         25%          -          -
                         C           -        47%          -
                         D           -        14%        51%
                         E           -          -        11%

          The Company's net investment in direct finance and sales-type
          leases is concentrated primarily with end users of the computer
          equipment.  The Company has various arrangements with banks and
          financial institutions in which lease receivables are assigned to
          the institutions in exchange for a discounted cash payment.  This
          financing is in the form of non-recourse notes, in which the
          financial institution has a first lien on the underlying
          equipment with no further recourse against the Company. 
          Therefore, the Company has no credit exposure from these assigned
          leases.


          14.  COMMITMENTS:
               -----------

          Operating Leases
          ----------------

          The Company leases two office facilities and office equipment
          under operating leases expiring through November 2002.  Total
          rent expense amounted to approximately $45,000, $90,000 and

                                      F-20
      <PAGE>

          $184,000 in 1996, 1997 and 1998, respectively. Total minimum
          lease payments due under non-cancelable operating leases are as
          follows:

                    1999      $202,480
                    2000       156,000
                    2001       156,000
                    2002       143,000


          Employment Agreements
          ---------------------

          In 1998, the Company has entered into employment agreements with
          two executives expiring through the end of 1999 with aggregate
          minimum payments totalling $655,000.

          In connection with the acquisitions described in Note 3, the
          Company has also entered into employment agreements, with five
          executives through the end of 1999 with aggregate minimum
          payments totaling $770,000.


          15.  SUBSEQUENT EVENT (UNAUDITED)
               ----------------------------

          On March 3, 1999, Paratech acquired certain assets of Web
          Business Systems, Inc., a privately held New York based web
          hosting and development company, for a total purchase price of
          $80,000.  The acquisition will be accounted for as a purchase;
          accordingly the purchase price will be allocated to the
          underlying assets and liabilities based on their respective
          estimated fair values at the date of acquisition.


                                    F-21